Qualification Requirements for Reverse Mortgage
A reverse mortgage is a unique loan option that allows senior borrowers who have paid off most or all their mortgages to live in their homes for the remainder of their lives, mortgage-free, in exchange for their equity. The most common form of reverse mortgage is a home equity conversion mortgage (HECM), which is insured through the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development. Because they are government-backed, certain reverse mortgage requirements must be met before a client can qualify for an HECM. Corban Financial Group is a federally approved reverse mortgage lender that can help you explore and apply for a reverse mortgage loan. We help clients in Redondo Beach, Torrance, Hermosa Beach, Rancho Palos Verdes, Palos Verdes Peninsula, and San Pedro explore different lending options to find the best-suited options for their needs. Contact us to get started today.
The FHA has set in place certain requirements and qualifications that seniors must meet before they can be approved for HECM. Our qualified lending professionals offer one-on-one consultations with our clients to determine their eligibility. Basic requirements for this type of loan include:
- The borrower (or the youngest of two borrowers in a couple) must be age 62 or older.
- Borrowers must have paid down their mortgage entirely or be able to place a down payment to subsidize the remaining due on the mortgage.
- Borrowers must be prepared to continue to pay for homeowner’s costs, including property taxes, homeowner’s insurance and general upkeep costs. Some HECM borrowers receive monthly payments which can be used to supplement these costs.
- The borrower’s home must be a 2-4-unit home, single family home, or an approved condominium or manufactured home.
- Borrowers must use their homes as their primary residences throughout the length of the loan or until they die.
- Borrowers must not have delinquent federal debt.
Before a senior is approved for this type of loan, he or she must undergo a consumer information session given by an HUD-approved counselor. This counselor will provide useful information to ensure would-be borrowers fully understand the terms and stipulations of HECM.
HECM for Purchase Requirements
Some borrowers choose to use their HECM loan payouts to purchase a new primary residence. To do so, these seniors will need to pay the difference between HECM proceeds and the sales price of their old home in addition to the cost of closing for the newly purchased property.
Your Partner in the HECM Qualifying Process
The Corban Financial Group team has helped hundreds of clients explore HECM and other loan and mortgage options. If you live in Redondo Beach, Torrance, Hermosa Beach, Rancho Palos Verdes, Palos Verdes Peninsula, San Pedro, or surrounding California, contact us to get started. A qualified agent will consult with you and help you explore all of your financing choices.