Many seniors need money to pay for health care or basic living expenses. One option seniors frequently consider is selling their home, although then they have to find a new place to live. Another option is a reverse mortgage. This allows for money to be borrowed against the home and requires no repayment until the last borrower moves away from the house or passes away. At this time, the loan plus interest and any other fees must be repaid in full.
In order to qualify for a reverse mortgage, you must be at least 62 years old. All loans have their own age requirements, but most lending institutions offering reverse mortgages use this particular age for qualification purposes.
Not all properties are eligible for reverse mortgages. For example, very rarely would a mobile home be eligible for a reverse mortgage, but single-family homes are. Some reverse mortgage lenders will accept a borrower-occupied building with two to four units, and some manufactured homes and condominiums. Applicants interested in a reverse mortgage should find a lender willing to offer this type of loan based on the type of residence.
An application is required for a reverse mortgage, and all owners of the home are required to apply. When the youngest owner reaches 62 years old, the application for a reverse mortgage may be made. Applicants should keep in mind that a reverse mortgage could potentially interfere with eligibility for various state and federal programs designed for seniors.
No Monthly Payments
There are no monthly payments required for reverse mortgages. In fact, the money is paid out to the homeowner either in a lump sum, in monthly installments, or is available via a debit card. Not paying any monthly payments allows seniors to live in their home and support themselves--with the trade-off that the home will be sold to repay the reverse mortgage debt when the last owner no longer lives in the home as a permanent resident.
Lenders require that seniors own the home that they are seeking a reverse mortgage for. They must also comply with all home ownership duties, such as maintaining insurance and paying premiums, paying taxes and other related home expenses.