Seniors in the United States who want to own a home or refinance a current property have the unique option of a reverse mortgage. You might feel overwhelmed by having to make mortgage payments in this type of economy. For seniors nearing retirement age or just past it, this probably rings especially true.
You’ll be relieved, then, to hear that there are little to no upfront payments required with reverse mortgages, and that’s what makes them great. The first payment usually isn’t even due until after the homeowner’s death. If you’re someone who anticipates having money in an estate to pay off the mortgage but don’t presently have the money to pay it off, a reverse mortgage might be ideal for you.
In the United States, the potential homeowner must be at least 62 years old to qualify for a reverse mortgage. The nice thing about them is that there is no minimum income requirement, nor is there a specific credit score required to qualify. Requirements do, however, exist. Potential homeowners must be able to afford the home and cover taxes on it, as well as insurance, water, gas, and other utilities.
The money received from the reverse mortgage can be used to pay off virtually anything. If you have an existing mortgage, however, it is required that you pay that off with the funds as well. It should also be noted that some types of homes will not qualify for a reverse mortgage, while other types like mobile homes have special requirements. These can include things like being built after 1976 and being an approved permanent foundation type of building. The potential owner must also go through an approved third party financial counseling session before the reverse mortgage will be approved.
The United States federal government’s Housing and Urban Development office, also known as HUD, offers these reverse mortgages. $625,500 is the lending limit as of 2009, although this figure has increased substantially in the past few years. You can also rest assured that a loan originator is not allowed to charge more than $6,000 for your reverse mortgage’s loan origination fee.
