As you approach retirement, most of your money has been invested in your home. A reverse mortgage is an excellent way to tap into your home’s equity. If you have paid off a home loan or have only a small amount to be paid, it is a good option to meet various financial goals.
Here are the criteria for reverse mortgage eligibility:
Personal criteria
The home equity requirement varies from one borrower to another and is based on your individual situation. If you are younger and the only titleholder to the property, the home equity required may be more than 50%. We recommend using a reverse mortgage calculator to understand the requirement.
HECM Property Criteria
Mobile and manufactured homes and multi-tenanted properties with more than four units are not eligible for a reverse mortgage
Financial criteria
To qualify for a reverse mortgage, you need to prove your financial ability to pay your loans and other expenses, such as insurance, taxes, and homeowners’ association fees. Moreover, you need to be financially stable to pay for regular repairs and maintenance of the property.
Non-payment of any of the aforementioned expenses violates the terms of the reverse mortgage and is considered a default. Therefore, considering the income criterion while contemplating a reverse mortgage is important.
Here are the types of income that are considered to determine your reverse mortgage eligibility:
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