Tips to help you get started, decide if you qualify, and cash in on reverse mortgages.
Reverse mortgages are a relatively new type of loan that is gaining popularity in the United States. They allow seniors 62 and older to liquidate the equity they have already paid into their homes in the form of cash. These mortgages can be used for a variety of purposes, such as home repairs and supplemental income, and can even be used as a down payment on a new home. What do you need to start the process of securing a reverse mortgage?
Necessary Qualifications
In order to be eligible for a reverse mortgage, you must be at least 62 years of age. You also must either own your home outright or have a low balance on your existing mortgage that could be paid off with closing costs should you sell your home. Finally, you must be currently living in the home to qualify. If you meet these conditions, you are likely to be approved for a reverse mortgage.
Types of eligible homes
Certain types of homes may not qualify for reverse mortgages. However, in most typical living situations you should be eligible to apply. Any single family home meets the requirements, and 2- to 4-family homes are also eligible, provided that the borrower lives in one of the units. Some manufactured homes and condominiums qualify for reverse mortgages, but this varies according to the individual lenders.
Where to apply
There are several sources available for reverse mortgages. Many private banks and lending institutions offer reverse mortgage programs. You may also find state and local government programs or nonprofit organizations that will arrange this type of service. The most common provider of reverse mortgages is the Federal government’s Home Equity Conservation Mortgages (HECM) program, which is backed by the U. S. Department of Housing and Urban Development (HUD). Applications can be filled out through a lending institution, online, or by phone.
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