What Are the Requirements to Comply with in a Reverse Mortgage?

A reverse mortgage is a kind of loan which is designed for elderly people allowing them to find a source of income during retirement on the basis of their home equity. There are a number of qualifications which you need to meet before you can apply and get approved for this kind of borrowing and these are the basic things which you need to understand first before you move forward. Although the qualifications in applying a reverse mortgage can vary from lender to lender, the basic eligibility rules are the same for all.

Eligibility Rules of a Reverse Mortgage

Basically, you must not be less than 62 years of age and must have an equity in your residential home. If ever two people own the home, as in the case of a husband and wife, the two must comply with the age requirement, meaning they both must be 62 years old or above. It is not necessary to own the entire equity of the home in order to qualify for a reverse mortgage, for as long as you have an equity to borrow against, a lending company will get you approved.

Secondly, the reverse mortgage applied for must be the primary lien upon the property. In other words, all the existing loans and debts on the property must be paid and settled before the completion of the reverse mortgage. The income from a reverse mortgage may be utilized in paying off existing debts. 

In most cases, how reverse mortgage works is basically seeing the reverse mortgage transactions which are completed when what is involved is a single-family home or other residential properties like condominiums. But regardless of the kind and nature of the property, it is a requirement that the borrowers lives and stays in the home. This means to say that it is impossible for you to complete your application if your property is a commercial type, a rental or a vacation type.

When the loan is still in place, the borrower will remain the occupant of the home once reverse mortgage is finished. It is also the responsibility of the occupant to keep the property in good condition at all times. It is possible to ask for the allocated money to finish necessary repairs when your home needs to be repaired at the time new loan is finished.

Some mortgages don't have credit requirements but many requires it still. Still, people will find it more easy to be qualified for a reverse mortgage rather than a traditional mortgage. Traditional mortgage usually neglect a loan when a person has past bankruptcy or low income, but in reverse mortgage these do not affect the decision of approving or neglecting a loan. Continue reading for some reverse mortgage facts.