Reverse Mortgage Requirements and Eligibility?
Building up equity in a home is no small feat. For seniors who have built equity in their homes and would benefit from a stable monthly income, reverse mortgage is worth consideration. Also known as a home equity conversion mortgage (HECM), a reverse mortgage translates home equity into monthly payments, while seniors stay living in their homes. At Reverse Mortgage Alabama, we guide seniors as they navigate through the process of exploring and obtaining a reverse mortgage. Covering the greater Birmingham area and surrounding areas such as my home town of Chelsea, AL. Because of their unique, federally backed opportunities, reverse mortgages have certain requirements and are not available to everyone.
Eligibility for Reverse Mortgage
To be eligible for a reverse mortgage, you must meet a few requirements.
Requirements as a Homeowner
First, a homeowner (or the youngest of two homeowners) must be at least 62 years of age. HECM loans are designed with seniors in mind who have built equity in their homes, but who are in need of an income supplement.
Before applying for a reverse mortgage, you will need to meet with a certified reverse mortgage counselor for a consumer information session and counseling. This process is designed to ensure that reverse mortgage borrowers fully understand the stipulations of an HECM and meet reverse mortgage requirements. They will discuss financial implications of reverse mortgage and alternatives to this program. The Reverse Mortgage Alabama team can help you find a certified counselor.
You must fully own your property or have considerable equity built to apply for this loan. Our team can help you evaluate if your equity meets the requirements and makes sense for your long-term goals.
For eligibility you must not have federal debt, and you must be able to continue to pay for property taxes, homeowners insurance and other financial obligations associated with living in your home. While you will no longer pay a mortgage, you will be responsible for these fees.
You must continue to occupy your home as your principal residence for the duration of your reverse mortgage contract. If you are considering moving to a different residence, we can help you consider alternatives. Should you decide to move and break your reverse mortgage contract, you will be responsible for the remainder of your loan.
Requirements for Your Property
To qualify for an HECM loan, your property must be:
- A single-family or 2-4-unit home that you will continuously occupy.
- A Housing and Urban Development-approved condominium.
- A manufactured home that meets HUD requirements.
Utilizing Your Reverse Mortgage
If you meet reverse mortgage requirements, you have the power to choose how you receive payment in exchange for your equity. You may choose to receive your payments on a regular basis over time. We can help you determine what type of payments will suit your lifestyle and for how long you would like to receive them.
You may also choose a lump sum for your HECM payment. While you will receive only a percentage of the value of your loan, some seniors choose this option to pay off immediate debt, or because they have different financial goals.
Lastly, your reverse mortgage payout can come in the form of a line of credit. You may use this credit when appropriate to maintain your lifestyle or to cover unexpected expenses.
Getting Started with Reverse Mortgage
For more information on the eligibility requirements of a reverse mortgage, contact Reverse Mortgage Alabama today. We have helped hundreds of clients in Birmingham, Hoover, and Chelsea, AL achieve financial security while continuing to live in their homes with reverse mortgage.