Eligibility Requirements for a Reverse Mortgage

Home equity loans are often used by homeowners to consolidate debts. They put all of your debts into one convenient monthly payment with lower interest. But did you know that if you are a senior citizen, you can get a loan on your home that does not require monthly payments?

This type of loan is called a reverse mortgage. It allows seniors to leverage the equity in their homes to pay off other debts, make home repairs, pay property taxes or health care costs, or do anything else with it they wish. No payment is due until the homeowner moves out, sells the home, or passes away.

There are certain requirements that must be met in order to get a reverse mortgage. But most senior homeowners do qualify. The guidelines are as follows:

• You must be at least 62 years of age. If there is more than one name on the title to the home, all parties must be 62 or older. If one of the co-owners is under the age of 62, that person’s name must be removed from the title before a reverse mortgage can be obtained.

• The home must be your primary residence. You cannot get a reverse mortgage on rental property or any other home you do not live in. This is because the balance of the loan is due once you no longer live in the home.

• The home in question must qualify. Most single-family homes and condominiums, one to four unit owner-occupied residences, and manufactured homes qualify. But some mobile homes and most cooperative housing do not.

Once you have received a reverse mortgage, there are certain conditions that must be met to keep it. If these requirements are not met, you may be found in default and have to pay back the loan. They include, but are not limited to, the following:

• You must pay your property taxes.

• Your home must be properly maintained. Necessary repairs must be made to ensure that the home retains its value.

• Just as with a traditional mortgage, you must keep your home insured. Homeowners insurance must be obtained to protect the lender’s interest in the home.

• If you declare bankruptcy, you could be found in default.

• You cannot abandon or donate your home to any person or organization.

• If the home is condemned, you will likely have to pay back the loan.

• Many contracts prohibit the owner from adding any new owners to the title of the home.

Most senior citizens age 62 or older who own their homes qualify for a reverse mortgage. As long as the home you wish to obtain a reverse mortgage on is your main residence and meets a few requirements, you can use it to get the money you need without incurring additional monthly payments. A mortgage originator can help you find the best reverse mortgage for your situation and get your finances where you want them to be.