Have you been wondering if you are qualified to get a reverse mortgage? You may intend to apply for a reverse mortgage, and just like any other kind of loan, there are some qualifications you will be required to meet. Since the Federal Housing Administration insures many reverse mortgages, there are some key elements regarding your home condition and finances that must meet the government standards. There are also some obvious reasons why an individual may not qualify, such as not meeting the reverse mortgage age requirement. You need to be at least 62 years to qualify for a reverse mortgage.
Reverse Mortgage Age Requirements- How much will you get from the reverse mortgage?
Once you have managed to meet all the eligibility requirements, you will be able to apply for a reverse mortgage with any lender of your choice at the current rates. The rate calculations are made to determine the amount of money you qualify to get. The formula used to calculate the amount of loan depends on;
- The age of the borrower
- Current interest rates
- The current market value of a home
Generally, the older you are, the more you can borrow. For instance, in case you have about $250,000 home equity at the age of 62, you qualify to get $110,000. You still qualify to get $149,000 for the same equity if you are 76 years old. You can always use a loan calculator to gauge how much you qualify to get. Usually, the loan amount you get is derived from the Federal Housing Administration’s mortgage limit in a particular area.
In case you have already paid off the home’s mortgage, or you are about to complete the payment, you qualify to get a reverse mortgage. The funds are paid to you as a credit line, in monthly payments or as a lump sum. Note that they are other hybrid formula schemes of payment, so it’s important to make your calculations and decide on the formula that works better for you.
Reasons you might not be eligible for a reverse mortgage
Adequate equity/ credit and debit issues
One misconception most people have is that reverse mortgages only consider the equity one has in their home. The truth is that your equity is considered along with the debts you have. Your credit history will determine your eligibility.
In case you have a history of outstanding or late payments on your credit card, mortgages including other loan accounts, this affects your eligibility even if you meet the reverse mortgage age requirement. Sometimes the lender can suggest that you wait so that you can get the opportunity to repay your credit and then reapply.
The amount you also owe on current mortgages will play a big role in your eligibility. In case you are not the outright owner of your home, you need to have a low mortgage balance you can pay off using the proceeds you get from a reverse mortgage loan. What’s more, you should be able to keep up with the insurance, taxes and different property charges when you get the loan. Your lender can help you determine this by conducting a thorough financial assessment.
Most people who can apply for a reverse mortgage are either retired or nearing retirement. This means they no longer get monthly income from their full-time job. The social security income is one consideration for the applicants since there are other kinds of income like rental or part-time work income.
In some cases, you can be denied a loan because you don’t have adequate income every month to help you pay the property charges. Luckily, there is a new feature that helps reverse mortgage potential borrowers to qualify even when they don’t meet the set income or credit requirements.
Other than finances, there are various conditions regarding the home. All applicants must meet these conditions if they want to get a reverse mortgage. You may think that you are eligible, but you realize that you lack one or more qualifications once you have applied for the loan.
One key component in home qualification is ensuring that the home meets the property requirements of the Federal Housing Administration. Most of these qualifications usually revolve around the upkeep and safety of the home. For instance, if you have a faulty roof or it’s not easy for a person to access your home safely, you may be required to handle your home repairs before the lender can approve your application. If fire hazards are present, you will need to fix them as well.
Once you have observed all the qualifications and eligibility requirements, it will be easy to access a reverse mortgage. Just ensure that you pick a reliable lender to avoid facing issues in the long run. Contact us and get started.