What Are The Requirements of A Reverse Mortgage?
In order to qualify for a Reverse Mortgage, whether refinancing or purchasing, you or your spouse or co-borrower must be 62 years or older. If you are refinancing, you must be named on title to the home (it does not need to be free and clear) or it must be held in an eligible trust. Whether refinancing or purchasing, the home must be your primary residence. Your responsibility as the homeowner is to maintain residency as well as timely payments on the property taxes, homeowners insurance and condo association dues (if applicable). Routine home maintenance is also expected.
While income and credit requirements are different from a traditional mortgage, verification of both is required. We will analyze all income sources including current employment, pension income, Social Security, income from IRAs or 401ks, stocks, bonds and mutual funds, if required. You must also meet certain income and credit requirements as it relates to monthly cash flow and residual income requirements set forth by FHA. We will look closely at how much money is left over after paying typical living expenses. If we determine that you have sufficient income remaining after your housing and other expenses are considered, then you will not be required to have funds set aside to pay for future tax or insurance bills. However, if we determine that you may not be able to maintain payment of the property taxes and insurance payments, then we will be authorized to set aside a certain amount of funds from your Reverse Mortgage loan to pay future charges. The amount set aside will be based on the life expectancy of the youngest borrower.
Your credit will be scored, however, we do not currently have a credit score requirement. Your credit history need not be stellar, however, late payments, collections, etc. may need to be addressed and supporting documentation may be required. In addition, you must not be delinquent on any federal debt or have any other properties secured by an FHA mortgage (this includes co-signing).
As your HECM Retirement Specialist, my goal is to educate and guide you through the process step by step, explain all of the available options for a Reverse Mortgage, all without pressure and with NO obligation. As well, you may wish to consider consulting with friends, family or a trusted advisor.