Reverse Mortgage Guidelines For Senior Homeowners
This BLOG On Reverse Mortgage Guidelines For Senior Homeowners Was UPDATED On January 30th, 2019
A reverse mortgage is a mortgage loan program that applies to those who are at least 62 years old or older and have equity in their home.
- Borrowers do not need good credit or income to qualify for a reverse mortgage
- However, mortgage applicants do need equity
- The amount of equity depends on how old they are
- The older the borrower, the less equity you need
Reverse Mortgages Guidelines Require Are Equity
A reverse mortgage is a mortgage loan program where the lender will do a refinance on current home. Borrowers no longer have to pay monthly mortgage payment.
- Monthly mortgage payment interest gets added to mortgage loan balance every month
- The balance does not get paid until the homeowner sells the home or passes away
- The homeowner needs to pay for the the following:
- Annual property taxes
- Homeowners insurance
- HOA dues (if any)
- Reverse mortgage loans are only available for those who are owner occupant
- Not available for second homes or investment homes
Mechanics Of Reverse Mortgage Guidelines
Reverse mortgages are for those homeowners who have equity in their homes and are at least 62 years of age.
- The younger the homeowner is the more equity that is required
- The mortgage lender assumes that the homeowner will live longer and will have the liability for the longer life span
- For example, if a homeowner is 62 years of age, the lender may require 40% equity in the home
- Whereas if the home owner is 72 years of age, the equity requirement might be 30%
- If the homeowner is 80 years old, the equity requirement might be 25%
- There is a chart on the amount of equity required where we can discuss on future articles
- These figures are just for illustration purposes
- We will not cover the specifics because reverse mortgages are complex deals
Housing Counseling Required
The borrower also needs to take a housing course. Once receiving a completion certificate they can move forward with the reverse mortgage.
- The homeowner can take cash out from a reverse mortgage or get monthly cash or a line of credit
- If the homeowner does not have enough equity for a cash out refinance or a line of credit, they might be able to qualify just for a reverse mortgage where they no longer have to pay any more mortgage payments
Borrowers Of Reverse Mortgages Do Not Ever Need To Make A Mortgage Payment
Reverse mortgages are a great mortgage loan product for seniors
- Those who have limited income
- Can no longer afford their mortgage payment
- Or those who need extra cash but cannot due a cash-out refinance mortgage loan
- This is because they are retired and no longer qualify for a refinance loan due to no income or limited income
Qualifying For Reverse Mortgage
The Gustan Cho Team at Loan Cabin Inc. are direct lenders with no overlays on government and conventional loans. We are also correspondent lenders on non-qm loans and alternative financing. Gustan Cho Associates at Loan Cabin Inc. has licensed personnel who are experts on reverse mortgage loans. Borrowers who need to qualify for reverse mortgages with a direct lender with no overlays can contact us at The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at email@example.com. We are available 7 days a week, evenings, weekends, and holidays.
By Gustan Cho