Who Qualifies For A Reverse Mortgage ?

• Age - The youngest borrower must be at least 62 years old.
• Credit Score - There is no credit score required. Bad credit doesn't disqualify you for a reverse mortgage. However, you cannot be in the middle of a bankruptcy. Any previous bankruptcy would have to be discharged. You cannot have any delinquent federal debts (such as IRS liens).
• Income Documents - A reverse mortgage is based mainly on the equity of the home and the age of the youngest borrower. No income is considered to qualify.
• Assets - The only asset required is the equity in the home. The home should be owned free and clear or have a relatively small mortgage.
• Property Types - Single family homes, 1-4 units, approved condominiums, and newer qualified manufactured homes may all be used as collateral for a reverse mortgage. If you have a condominium, a manufactured home, or if your property is unique, check first with a reverse mortgage lenders to see if your specific property qualifies.

What Can A Reverse Mortgage Do For You?

• Improve Your Cash Flow - There are several options for taking the equity from your home using a reverse mortgage. Your personal situation will determine which payment option is best for you. You may be able to choose from a lump sum, monthly payments for life (tenure), monthly payments for a term (term), line of credit, or some combination of these payments.
• End Monthly Mortgage Payments - If you currently have a mortgage on your house and you are having trouble making the payments, a reverse mortgage might stop monthly mortgage payments for as long as you live in the home. Reverse mortgages might also be used to stop a foreclosure process.
• Purchase a Home - As of January 1, 2009, you can use a reverse mortgage to purchase a home. You would need to have a very large down payment so that the loan-to-value ratio of the transaction fits the lenders' guidelines.

Knowledge Is Power

When considering a reverse mortgage, complete a HUD-approved counseling session first. It's required for most reverse mortgage programs and can help you get familiar with reverse mortgage terms and disclosure forms. Commit to a loan only once you understand and agree with its terms.

Renee Morgan
Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.