Reverse Mortgages: What Are They, Who Are They For, and How Do I Qualify For One?
So, in other words, it’s a mortgage which helps convert a part of a homeowner’s equity into cash. All of the reverse mortgages completed by Homestead Financial Mortgage are HUD insured and called Home Equity Conversion Mortgages or HECM.
How do I qualify?
From a credit perspective, reverse mortgages are easy to qualify for. Normally, the borrower cannot currently be in a bankruptcy and must be 62 or older. The lendable equity is determined as a function of age of the youngest borrower and appraised value. Usually there is no credit score minimum and no income verifications.
How do I obtain a reverse mortgage?
You would have to make application with an FHA approved mortgage banker which is qualified to originate reverse mortgages. Further, in order to qualify, there is a training class borrowers must take which must be completed before a borrower may even apply. You can search for a HECM counselor, or call 1(800) 569-4287.
How do I receive money?
A borrower may receive cash from a reverse mortgage in a lump sum, in equal monthly payments over time, so long as at least one borrower occupies the property, or a combination of lump sum and monthly payments.
How do I pay back a reverse mortgage?
When the last homeowner dies or moves from the property, the loan will changes status and repayment terms will need to be determined or the property must be sold.
Reverse mortgages are not well understood, but there are laws and policies with reputable lenders which will help you make an educated decision so long as you do your own research. Provided you have done your homework, it is a good way to benefit some, converting their equity into cash.
For further research you can go to HUD’s website.