For those seniors who don’t intend to leave their homes, a reverse mortgage can be the key to a quiet and stress-free retirement. Unfortunately, securing one is no easy task. The purpose of this article is to tell you everything you need to know so that you can get a reverse mortgage.
Types of reverse mortgages
It may surprise you to know but there are different types of reverse mortgages. However, Home Equity Conversion Mortgage (HECM) loans make up the vast majority. HECM loans are issued by private banks and insured by the Federal Housing Administration, which means that they are guaranteed by the U.S. federal government. They come with no income limitations, no medical requirements and no restrictions on how you can spend the money. But they do include one important drawback. No matter how much equity you have in your home, the maximum loan amount is limited to $625,000.
Non-HECM loans are also available, of course. They offer loans that are higher than HECM loans, but they are not federally insured and are more expensive.
How to get a reverse mortgage
Since HECM loans are the most common, we will show you what you need to do to qualify for one:
- You have to be at least 62 years old;
- You must not be a delinquent of any federal debt;
- The property is either a single family home, a two-to-four unit home, a HUD-approved condominium project, a townhouse, or a manufactured home that meets FHA requirements;
- You have to own the home and occupy it as your primary residence;
- If you own a two-to-four unit home, you have to occupy at least one of the units;
- You have to pay all ongoing property charges on time and in full;
- You have to take part in a free consumer information session offered by a HUD-approved HECM counselor.
In addition to all of these requirements, it’s also a good idea to possess a good credit history and to show your lenders that you can meet any mandatory financial obligations.