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Who Can Get a Reverse Mortgage is a question we are asked on a daily basis. The question comes from people who want and need financial assistance during their retirement years. However, a lot of folks do not know what the first...and most important ingredient is in order to qualify for this type of loan.
The essential ingredient is...HOME EQUITY! Without home equity there is no asset to liquidate in order to pull cash from the home.
Many people are confused because they hear commercials on radio and television or see ads in their local newspaper encouraging people 62 or older to get a reverse mortgage. Somewhere along the line, the only part of the commercial or ad that sticks in people's memory is the age 62 or older part. People are not hearing the rest of the message regarding what is actually needed to qualify for this kind of home loan.
It's heartbreaking to have folks call and email saying things like: "I thought this was a government program to help senior citizens." or "If the government can bail out the banks, why aren't they helping senior citizens at risk of losing their homes?" "How can I get a senior citizen loan and save my home?"
Although we empathize with those sentiments, the fact of the matter is, qualifying for a reverse mortgage has always required A LOT OF HOME EQUITY....in fact depending on your age, anywhere from 40 to 60% equity is needed to qualify.
So What Exactly is a Reverse Mortgage Anyway?
A Reverse mortgage is a deferred interest loan. This means that whatever amount of money you borrower from your home with this kind of loan will accumulate interest over the number of years that you are alive and continue to live in your home. If your life expectancy is 20+ years from the time you take out the loan, the amount of interest that will build up over 20+ years will be substantial.
The lenders attempt to estimate what your home will be worth in the future, versus the total amount of principal plus interest that will accumulate over your expected lifetime. They try to make an educated guess about how much money they can lend you today, allow for the deferred interest accumulation over your lifetime and hopefully, not be "underwater" by the time the loan has to be paid off through the sale or refinance of your home by your heirs.
These are hazardous times, not only for homeowners but for lenders as well. There is tremendous uncertainty about where housing values are going in the future. Have home prices bottomed out or are they still declining? Will we ever see the values from 2002-2006 again? Maybe...maybe not. Time will tell.
If you would like to find out if you have enough equity in your home to qualify, please request an evaluation today. We are happy to run the numbers for you without any obligation on your part.
N Sioris is the administrator for the Reverse Mortgage Information website Let Your Home Pay You. It is a National resource for seniors and their families looking for information about the pros and cons of HECM reverse mortgage loans. Let Your Home Pay You offers facts about how reverse mortgages work, free consumer reports,how to qualify for a reverse mortgage, things to consider before applying and resources to HUD approved and licensed industry professionals that specialize in originating reverse mortgage loans Nationwide. You can reach her toll free at, 1-888-269-1098 or through the website
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