Are You Eligible For A Reverse Mortgage?

Determining whether you are eligible for a reverse mortgage is fairly straight forward. Although reverse mortgages are becoming common place and there is a lot of media coverage about them, many people are still a bit hazy about what the basic eligibility requirements are. Unhappily, we get requests on a daily basis from people who want or need this type of loan, but who simply are not eligible for it.

Some seniors are under the impression that to be eligible for a reverse mortgage all one needs is to own a home, regardless of how much is still owed on the current mortgage balance. They think of a reverse mortgage as a typical conventional refinance transaction where the loan amount can be very close to the value of the home. However, this is not the case.

Property Equity

To be eligible for a reverse mortgage, there must be substantial equity in the property. Minimally, the amount of equity should be in the neighborhood of 50 to 60% of the appraised value, depending on the ages of the homeowners and the current interest rate. The reason the equity requirement is so high is because the equity must last the expected life time of the youngest owner on title to the property.

For example if the youngest homeowner has just turned 62 (which is the minimum age requirement to be eligible for reverse mortgages) the money being paid out to the seniors from the built up equity, could potentially have to last 30+ years.

To be eligible for a reverse mortgage here are the main criteria:

• All owners on the title to the home must be at least 62 years old
• There must be substantial equity in the home - 50 to 60%
• The home must be your primary residence
• Eligible property types are: Single Family Homes, Condos, Town-homes, 2-4 Unit owner occupied homes, and Manufactured homes that were built after June, 1976 and are on permanent foundations where the land is owned not rented or leased.
• Currently, Agriculturally zoned property is NOT eligible and some coops are not eligible.
• You must complete Reverse Mortgage Counseling

Criteria that are NOT considered when determining if you are eligible for reverse mortgages are:

• There are NO credit, income or medical qualifications

Use our reverse mortgage calculator if you would like to take a quick look at whether you are eligible for reverse mortgages.

After you determine that you have enough equity in your home to qualify, you will want to get a complete benefit summary that will show you the various reverse mortgages that you are eligible for and which one will pay you the most money. The summary will be specifically prepared for your property and based on your particular age(s). Get your free reverse mortgage quote today!