subject: Reverse Equity Mortgage - Who Is Eligible [print this page] The basic idea of the reverse equity mortgage is to help senior citizens, who have modest income and who need extra disposable money, to get it from the equity of their homes. So these people have low monthly incomes but they own homes, where they have equity left. Okay and they must be age 62 or older.
1. Property Types Allowed.
A senior, who can become eligible for a FHA loan, has to own a manufactured home constructed after 1976, a 1- 4 unit home or a condominium, which is approved by HUD. Additionally all property types must meet FHA standards. The properties, which are located on cooperative developments are not eligible.
2. Who Has The Right To Be On The Loan?
This is a very important question, which you have to think thoroughly before you sign anything. It is important to put the names of the home owners on the note, but all must naturally fulfil the requirements, i.e. to be 62 or over.
On one note there can be maximum three owners and at least one have to live permanently in the home. These three owners can be non relatives, but all must fulfil the requirements.
3. Reverse Mortgage vs Home Equity.
The senior reverse equity mortgage loan uses the home equity. The home equity is the capital, which the home owner has paid during a long period of time. Now, when a senior has lower income and increased expenses, owing to medical bills for instance, he wants to use the home equity and to convert part of that into cash money.
4. Can You Get Home Equity Mortgage Without Income?
Yes, you can. If you wonder, how is this possible, you can think that the loan is taken against the equity of the home. Another principle is, that the idea is to help seniors to get more disposable monthly income. So when you get money from the equity of the home and the loan will be paid back, when you pass away or move permanently, your incomes have no meaning.
5. You Cannot Owe More Than The Value Of The Home.
One part of your reverse equity mortgage is a compulsory mortgage insurance. The idea is, that if the selling price of your home does not cover all the reverse loan costs, the remaining sum will be paid from the mortgage insurance. This means, that you will never owe more than the value of your home, nor your other assets will never be used to pay this loan.
by: Juhani Tontti
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