InsightsFrenzy.com | Discover Insightful Content

7 Requirements For A Reverse Mortgage

Everybody dreams of having a property that they can call their own. Especially, when it comes to owning a home. Fortunately, we have woven the threads of our society with lots of facilities for people requiring financial support. One of these facilities is a reverse mortgage. It is a financial contract made between you and the government, mostly after retirement. However, there are some formalities that you need to fulfill in order to become eligible for this type of a contract.

Here are 7 things you need for a reverse mortgage:

Minimum age
The government emphasises on having all the applicants over the age of 62. Anybody below this age is not allowed to apply for a reverse mortgage and even if they do, the application is either rejected or not processed at all. Along with an age constraint, the applicant is expected to borrow a reverse mortgage ideally for accompanying their retirement income.

Primary residence
The borrower must be the resident of the house for which the loan is being taken. It should be their primary residence. It is mandatory for you to show that you have been living there for a specific number of years to fulfill the eligibility criteria for a reverse mortgage.

Type of residence
The type of residence you are applying for is the second most important criteria for the application. You cannot apply for a reverse mortgage if the residence is simply a farmhouse on a hill station. It ought to be your primary residence for you to be eligible for a reverse mortgage.

You Might Also Like: 5 Things To Do After You Pay Off Your Mortgage

Enough equity in the house
Even if you are the resident of the house that you are taking the loan for, which you have agreed is your primary residence, your equity in that house matters. Typically, you are required to have a minimum of 50% equity on that particular house.

Clear your first mortgage
Even if you fulfill all the above criteria, fulfilling this one is a little tricky. You can only apply for a reverse mortgage if you have already cleared your existing mortgage or if you are about to clear it off. You are not eligible to apply otherwise.

Pay off your mortgage
When you get your reverse mortgage approved, you are required to make a declaration that you shall be using it to pay off the remaining loan amount for your house. Thus, finally, after doing so, you can call it your own home.

Payment of charges related to property
The government, as an issuer, can ask you to fulfill as many criteria as they wish to. They expect the borrowers to declare that they shall continue to pay all the existing taxes or charges related to the property for which the reverse mortgage is taken. These charges can include the insurance of the house or any other taxes that are to be taken care of by you, which would not be a part of the amount of the reverse mortgage.

Keep yourself updated with the latest on Mortgage . Like us on Facebook and follow us on Twitter for more on Investments.

Disclaimer:

The content provided on our blog site traverses numerous categories, offering readers valuable and practical information. Readers can use the editorial team’s research and data to gain more insights into their topics of interest. However, they are requested not to treat the articles as conclusive. The website team cannot be held responsible for differences in data or inaccuracies found across other platforms. Please also note that the site might also miss out on various schemes and offers available that the readers may find more beneficial than the ones we cover.

Popular Articles

Things to know before getting a reverse mortgage

Seniors who are 62 and above can borrow money from the lender against their home’s equity, which is called a reverse mortgage. The borrowers are expected to pay property taxes, maintain and insure the home according to the FHA guidelines.

Things To Know About Reverse Mortgages

Things to know about reverse mortgages Reverse mortgage for seniors is a loan facility available for seniors over 62 years old. It allows people to pull their equity out of their home.

Here’s what it takes to be eligibile for reverse mortgage

A reverse mortgage helps you convert your home equity into funds that may be the need of the hour. It is quite similar to a traditional line of credit that you can avail from banks and financial institutions.

Get the best estimate of your loan with a reverse mortgage calculator

A reverse mortgage for seniors is a type of loan that facilitates the conversion of equity into cash. With certain rules and regulations, seniors who are above 62 may continue to be the owners of the house while getting cash for a purpose such as home furnishing.

4 Disadvantages Of A Reverse Mortgage

A reverse mortgage is basically a home equity loan that doesn’t require you to have income or good credit. You can get a reverse mortgage either as a lump sum amount of money or as a line of credit, but you don’t need to make payments on it.

An Overview Of Reverse Mortgage And How It Works

An overview of reverse mortgage and how it works Reverse mortgage for seniors is a loan available for senior homeowners, who are about 62 years or older, and it requires no monthly mortgage payments.