Does your income influence your ability to get a reverse mortgage? Read on for secrets your bank doesn’t want you to know!
A reverse mortgage differs from a forward mortgage in several important ways. One of those differences is the criteria used to qualify a homeowner or homebuyer for a reverse mortgage. With a typical, or forward mortgage, the lender or mortgage company is looking primarily at the borrower’s ability to repay the loan. Qualifying for a forward mortgage involves your income, your credit score, your debt ratios, the length of time you’ve been employed, etc. Reverse mortgages are designed to help seniors who may have equity but not enough cash.
How Do I Get Started?
The requirements to qualify for a reverse mortgage differ slightly from lender to lender so make sure to do your research and ask questions. As with any financial transaction it is essential that you understand what you are signing before you enter into a transaction for your own protection. Although there are many reputable lenders that can provide you a reverse mortgage, there are always a few bad apples in the bunch so be cautious! Once you do your homework and select a lender that you feel comfortable working with there are several things you need to know as far as qualifying for a reverse mortgage. Generally, the proceeds of the loan are tax-free, there are no minimum income requirements, and for most reverse mortgages the money can be used for any purpose.
How Do I Qualify For A Reverse Mortgage?
There are several types of reverse mortgages offered by different lenders. The Department of Housing and Urban Development (HUD) offers a federally insured Home Equity Conversion Mortgage (“HECM”) through approved lenders. Many state and local governments offer what is known as a single-purpose reverse mortgage. These particular reverse mortgages usually can only be obtained for certain uses. There are also proprietary or private-label reverse mortgages available from banks, mortgage companies, and other private lenders.
As stated earlier, the requirements for a reverse mortgage qualification are different from forward mortgages. Many homeowners and homebuyers wonder if their income influences their ability to get a reverse mortgage. In most cases, the answer is ‘no’. Reverse mortgages are primarily secured by the equity in the property, not the borrower’s ability to repay the loan. The factors that your reverse mortgage lender will look at when deciding whether you qualify will usually include:
• Your age (usually borrowers must be at least 62 years old)
• The value of the home
• The amount of equity in the home
• The interest rate
Related posts:
- Can My Current Income Affect My Ability To Get A Reverse Mortgage?
- Can My Current Income Impact My Ability To Get A Reverse Mortgage?
- Is My Credit Score/Income Used to Help Qualify for a Reverse Mortgage?
- Does A Reverse Mortgage Count As Income?
- Is My Limited Income Used To Help Qualify For A Reverse Mortgage?