If you are considering a Reverse Mortgage, then there are some qualifying factors that you will also need to consider. First of all, you must be AT LEAST 62 years old to qualify for a Reverse Mortgage. Currently, there are no income or credit qualifications to obtain a Reverse Mortgage, but you must own your home outright. An exception to that rule is made if you only have a small balance remaining on your mortgage; this can be paid off with a portion of the proceeds from the Reverse Mortgage. Another qualifying factor is that at least one borrower must be residing within the home at the time of the application for, obtaining and collecting funds on the Reverse Mortgage.
Additionally, the amount you may qualify for with a Reverse Mortgage can depend on the following factors:
While you are not required to make payments on the principal balance or interest on your Reverse Mortgage, if you are residing in the home, you are still responsible for paying annual property taxes, homeowner’s insurance fees and property maintenance fees. If you fail to pay your insurance and/or property taxes during the time you are collecting your Reverse Mortgage funds, your loan will automatically be categorized as ‘in default’ and you will be immediately responsible for paying back the loan. In addition, if homeowners are not diligent about keeping up with their scheduled fees for their home, they may end up facing foreclosure. If you vacate the property at any time, the loan defaults and you must begin repayment immediately; if you are planning to move in the near future, then a Reverse Mortgage might not be the right option for you.
If you, the borrower, passes away during the term of your Reverse Mortgage, either during funds disbursement or during repayment, the bank will take its portion of the payment required and leave the rest of the payout to be disbursed among your surviving heirs; one of the great benefits of Reverse Mortgage is that your debt cannot be passed to your heirs, but they CAN inherit the remaining equity.
This type of loan is best suited for elderly who are on a fixed income, and in danger of losing their homes due to lack of financial stability. In addition, a Reverse Mortgage can help provide a means of living, where previously, risk of home loss was inevitable. If you currently have a mortgage, but do not have any issues making your payments, and you have other sources of equity or assets, it might be a good idea to wait on getting aproved for a Reverse Mortgage. Many borrowers make the mistake of removing their funds too soon, leaving them with problems down the road when it comes time to pay other fees, or worse, leaving them with no cushion, should they fall upon a hardship or require full-time medical care.
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