- A Financial Tool
- Criteria to Get a Reverse Mortgage
A reverse mortgage is a loan product designed for senior homeowners 62 years of age and older in order to help them age in their homes if they desire. Reverse mortgages allow seniors to access the equity in their homes and convert it into non-taxed cash to be used however they would like. Meanwhile there is no monthly mortgage payment and the home’s ownership stays with the borrower.
A Financial Tool
Senior homeowners can choose to spend their reverse mortgage funds however they would like. After paying off their existing mortgages, many use these funds from their home equity to pay off credit card bills, daily expenses, or medical costs. Paying these obligations can free up a lot of cash from the borrower’s income that used to be spent paying them down.
In addition, some senior homeowners use it as a retirement financial planning tool. When the line of credit disbursement is chosen, seniors can in essence freeze the equity of their home to save its availability for their possible future use. Meanwhile, because interest is charged only on the used portion of funds, all unused funds are interest free.
Criteria to Get a Reverse Mortgage
There are a few criteria, however, that senior homeowners must satisfy before qualifying for a reverse mortgage. Senior homeowners must be at least age 62 or older and live in their home as their primary residence. The original mortgage must be paid off or at least paid down so that there is enough equity available to pull.
There can be no delinquency on federal debt and borrowers must have the financial means to be able to satisfy loan obligations and terms, such as paying property taxes, insurance, and any homeowner’s fees. Because there are no monthly mortgage payments on the loan, borrowers are obligated to stay current on all of these expenses or they may face foreclosure.
In addition, borrowers must complete a “consumer information session” with a counselor who is approved by the U.S. Department of Housing and Urban Development (HUD).
Senior homeowners who have closed this loan have been raving about how much it has helped them. Every day, borrowers share their testimonials with the leading lender in the reverse mortgage industry, American Advisors Group (AAG), praising the government-insured loan product.
Danny W. of Washington, for example, had only good things to say of his reverse mortgage. “The peace of mind and flexibility the reverse mortgage offered me is immeasurable,” he says. “Thanks to my reverse mortgage I was able to travel to Europe and visit my family.”
John H. of Pennsylvania also had praise. “I don’t have to pay a mortgage payment each month and I got some cash on top of it. I felt like I had nothing to worry about and that everything would be taken care of and it was!”
“I was down to nothing,” says Theodore C. of New York. “But the reverse mortgage allowed me to pay off my mortgage when I was about to be foreclosed on. I got to keep my house, fix it up nicely, and have extra money in the bank. I’m very satisfied and happy with the reverse mortgage.”
Many senior homeowners have found in a reverse mortgage the help they needed to be able to stay living in their homes for as long as they wish while receiving their home’s equity in cash without having to pay a monthly mortgage payment. For many seniors across the United States, this loan product is exactly the solution they had been looking for.