FHA Reverse Mortgage and Who Qualifies
I have read different stories about a reverse mortgage and thought it was time I found out truly what a reverse mortgage is, who qualifies and what is needed for them to get a FHA Reverse Mortgage. I have heard good stories and bad stories, so I felt this was one of those items that should be discussed.
According to U.S. Department of Housing and Urban Development, a reverse mortgage is a special type of home loan that lets a homeowner converts a portion of the equity in his or her home into cash. Before you think right away that you can run right out and get a reverse mortgage, keep reading. You might not even qualify.Unlike a traditional home equity or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD’s reverse mortgage provides these benefits and it is federally-insured as well. I know you are thinking great, can I go and apply now. Not just yet.
As you know with every loan whether it is a reverse mortgage loan or even a traditional loan, there are specific requirements you must meet in order to qualify for a loan. The first requirement for a HUD reverse mortgage loan is HUD’s Federal Housing Administration (FHA) requires (sounds non-negotiable to me) that the borrower is a homeowner, 62 years of age or older; own your home outright or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan and you must live in the home.
I know that was a mouth full so let’s break it down. First, the borrower must be 62 years or age or older. If you are not this age or older, you do not qualify for a HUD reverse mortgage. I would say move on to find other options for your particular situation. Second, you have to own your home outright or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan. Does this make sense at this point? Third, you must live in the home. Fourth requirement which notice I did not say optional is that you receive consumer information from HUD-approved counseling sources prior to obtaining the loan.
I am a firm believer in education and knowledge in order to make informed decisions. Therefore, you should not go wrong with the consumer information from a HUD-approved counseling. Make sure you have studied this loan and have questions to ask the counselor. Do not go to this meeting empty-handed and unprepared.
If you are unsure where to find HUD approved counselors in your area, there are several ways you can find out. You can contact some of your local non-profit housing agencies and find out if they have HUD approved counselors that can provide information on reverse mortgages. You could also contact the Housing Counseling Clearinghouse on 1-800-569-4287 to obtain the name and telephone number of a HUD-approved counseling agency and a list of FHA approved lenders within your area.
I don’t want to overwhelm you at this point, come back next time for more information on reverse mortgages.
Taffy Wagner
