A reverse mortgage loan is a tool that seniors may utilize to access equity within their houses, without selling. Those loans are like a home equity loan, although both the interest and principal are deferred as long as an owner occupies the premises. After the reverse mortgage loan is issued, interest upon the principal –as well as all other charges– are added toward the overall value which is owed, and it has to be paid off if the homeowner passes away or moves. There are minimum age limitations to apply for a reverse mortgage loan, as well as maximum amounts which may be borrowed, irrespective of the home’s value. Some expenses related to a reverse mortgage loan include mortgage insurance, appraisals, and origination fees.
Age requirements for reverse mortgage
Anyone over 62 years of age in the U.S. can apply for a reverse mortgage. Also, the person should have established equity by owning a house that has been paid in full or owe less than the home is worth. An equity percentage that he is able to draw down typically is a function of his age, and seniors are permitted to have access to more equity. As a condition of a reverse mortgage loan, a homeowner typically is required to satisfy all existing mortgages with the proceeds, prior to spending them in another way. In most instances, the homeowner will also have to finish all bankruptcy proceedings prior to being awarded reverse mortgages.
Typically, it’s possible to receive such loans for both mobile and stick-built homes, although mobile homes often will have additional requirements. To be eligible for a reverse mortgage loan, mobile homes should have been built no earlier than 1976 and need to have a permanent foundation. Additional requirements often are present irrespective of the kind of house. Homeowners will typically have to search for counseling before making a decision, so they can completely understand how the loans function as well as any possible consequences.
After the homeowner takes out a reverse mortgage, he or she is typically allowed to live in the house for the rest of his or her life. The person retains ownership of the home, and reverse mortgage loans generally don’t need to be satisfied until an owner passes away or leaves the home. Usually, the homeowner is allowed to leave the property for as long as 364 days, like for an extended rehabilitation or nursing care, prior to the lender demanding the reverse mortgage to be paid.
For more information on our reverse mortgage loans, contact Longbridge Financial today.