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A reverse mortgage, also called HECM or a Home Equity Conversion Mortgages, is not the same as traditional mortgages or equity loans. Instead they were designed to help those who are retiring or have retired and are in need additional funds. Reverse mortgages are based on your home and the amount of equity available to you from your home.
These types of mortgages are not always necessary so before deciding to apply for one it is good to have a basic understanding about them. The best way to do this is to contact a mortgage company certified by the United States Department of Housing and Urban Development, or HUD. Only they can give you specific reverse mortgage information that is specific to you and your home.
Your home is the main factor in whether or not you will qualify. The factor of your house is based on the HUD mortgage standards which all mortgage companies are required to follow. In order to receive a reverse mortgage your home must have equity in it. Equity is the result of subtracting what you currently owe on your home from the current sellable value of your home.
In order for your home to be eligible for a reverse mortgage you must either own it out right or be in the process of paying a mortgage on it. It is better if you already own your home because you will ultimately have more equity available to you. If you are still making mortgage payments on your home then that is okay. What you receive from the this type of loan it is first used to pay for the remaining loan on the home eliminating the original mortgage. Because most borrowers owe substantially less than the value of their home they are still able to receive monetary payments from the reverse mortgage. This is important to many home owners because they no longer have to worry about a mortgage payment.
Another factor to consider when determining if you home will qualify for a reverse mortgage is the age of all the person's listed on the deed of the home. The age requirement is a minimum of 62 years of age. Therefore if anyone else listed on the deed who will be named on the reverse mortgage is younger than 62 then you will not get the loan
Your home must be in sellable and habitable condition in order to be considered for a reverse mortgage. This doesn't mean that the mortgage company is going to sell your home. What it does is increase the overall value of your home therefore maximizing your home equity.
When deciding whether or not you want to apply for a this type of loan you should discuss it with your family. There are many advantages and disadvantages to having this type of loan and so therefore you want to make sure that you aren't rushing into a decision. Your family can also help you make your house appealing to improve your house's ability to qualify for a this type of loan with HUD.
If you want to know if your home is eligible for reverse mortgage, you should consider talking to Jeff Entratter, Senior Mortgage Advisor with Perl Mortgage. He has over thirty seven years of lending experience.
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