As there are many different kinds of reverse mortgages, the HECM, or home equity conversion mortgage, one is the most common. Such loans are awarded by private banks, as well as insured by the FHA–they’re the sole reverse mortgage products that are guaranteed by the United States federal government. The loans do not have any income limits or medical requirements, and there aren’t any limits on how the funds may be spent. The main downside to this kind of reverse mortgage is that the max loan amount is restricted–presently, it is the lesser of the appraised value or home equity conversion mortgage FHA mortgage limitation of $625,500).
Non-home home equity conversion mortgage loans are also available from a variety of lending institutions. Those loans provide amounts that are greater than HECM loans. However, that possible benefit will come at a cost: non-home home equity conversion mortgages aren’t federally insured and may considerably be costlier than home equity conversion mortgage loans. Few non-home home equity conversion mortgage loans are made, and typically just to very high-value houses.
Because most reverse mortgages are home equity conversion mortgage loans, we will concentrate on these. To be eligible, you have to:
•Be at least 62 years of age.
•Outright own the house (or have low mortgage balance).
•Occupy your house as your main residence.
•Not be delinquent in federal debt.
•Be able to make full and timely payments for continuous property charges (that is, insurance, HOA fees, insurance, property taxes, and so on).
•Be involved in a consumer data session provided by a HUD approved home equity conversion mortgage counselor (those sessions are free of charge).
Additionally, your house has to be:
•Single family house or 2-to-4-unit house (and occupy at the minimum of one of the units).
•HUD approved condo project or townhome.
•Manufactured house that meets requirements by the FHA (constructed after June of 1976).
The quantity of funds received depends on upon numerous factors, which include the age of youngest borrower–a couple may borrow, not just an individual–, present interest rate, the value of the house and–in the instance of a home equity conversion mortgage loan–the lending limitation. Generally, the older you are, the more valuable the house and more equity you have in it, the more funds you’re able to receive for the reverse mortgage from a reverse mortgage company.
