Vote It Up When Applying for a Reverse Mortgage

Reverse mortgages can be a very useful financial tool for older people who would like to supplement their incomes during retirement. These financial products are designed to provide access to the equity in a home without creating a new bill to be paid each month. If you’re considering a reverse mortgage, you will benefit from knowing the answers to these most commonly asked questions.

5 Comments

  1. VoteItUp on April 26, 2016 at 1:02 pm

    What are the age requirements for a reverse mortgage?

    To qualify for a reverse mortgage, at least one person on the deed or mortgage of the home must be at least 62 years old. Some of the lenders have increased this age to 65, but the law at this time only requires a person to be 62 years old to qualify. In addition to the age requirement, your home needs to be paid off or nearly paid off to qualify for the loan. These loans are based on available equity.

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  2. VoteItUp on April 26, 2016 at 1:02 pm

    Will I have to repay the loan?

    No. Repayment of the loan is taken care of by the sale of the home after you leave residence or pass away. The mortgage holder will sell the house to recover all monies that you have received plus any applicable interest. If there is any money left over after the sale, that money goes to the heirs of the estate. If the sale of the home does not cover the amount that was given during the mortgage period, your estate may be responsible for the balance of the debt. It is very important to read through the contract carefully to see if it contains a clause that will make your estate responsible for any monies not covered by the sale of the house. Every contract is different, so read it carefully before signing.

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  3. VoteItUp on April 26, 2016 at 1:03 pm

    How do I receive the money?

    How you receive the money will be a decision you must make at the time of the loan closing. You may take the money in one lump sum, you may decide to take monthly allotments, or you may set it up similar to a home equity line of credit and only draw from the funds when you need extra money. It is important to check with your lender before applying to see if they have any restrictions on how the money is dispersed after the loan is granted.

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  4. VoteItUp on April 26, 2016 at 1:03 pm

    Can I have more than one reverse mortgage?

    No. You can only receive one reverse mortgage and it can only be on your primary residence. Reverse mortgages do not apply to second homes, vacation properties, or rental properties. If your home gains significant value while you have a reverse mortgage, you can reapply for a new reverse mortgage, similar to refinancing, to access the new amount of equity. There will be costs associated with refinancing a reverse mortgage that should be considered.

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  5. VoteItUp on April 26, 2016 at 1:04 pm

    Are there any other requirements I should know about?

    Before you are granted a reverse mortgage, laws governing these types of loans will require that you attend a financial counseling class. This class explains everything that you need to know about the loan program. In addition to this requirement, you will be required to live in the house while the reverse mortgage is in effect. If it is necessary for you to move from the home, such as being permanently placed in a nursing home, the loan becomes payable in full. You will also be required to keep the home properly maintained and all property taxes current on the home. Some lenders may have additional requirements on a reverse mortgage and you should be aware of these requirements before finalizing your loan.

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