Reverse Mortgage Eligibility Guidelines

There are several qualifications that you need to meet in order to get a HECM.
1. To be eligible for a HECM reverse mortgage, the Federal Housing Administration (FHA) requires that all homeowners be at least age 62. If the home is not owned free and clear, then any existing mortgage must be paid off using the proceeds from the reverse mortgage loan at the closing. In addition, you must meet financial eligibility criteria as established by HUD.
2. The home must be your primary residence.
3. You must own your home free and clear or have a significant amount of equity in your house. Reverse mortgage lenders require that their mortgage is the first mortgage on the home (meaning that they are the first ones that get paid if your house is foreclosed on). If you have a traditional mortgage on your house, you need to get enough from the reverse mortgage to pay it off.
4. Your house must be a single family residence, condominium, townhouse, or two to four unit home with at least one unit occupied by you. You usually cannot get a reverse mortgage on a mobile home or a cooperative.
5. The home must be completely constructed and have a certificate of occupancy.
6. Your home’s condition cannot be below HUD’s minimum property standards.
7. You must complete counseling with a HUD-approved counseling agency.
Unlike with a traditional mortgage, your credit score and income have no effect on whether or not you are able to get a reverse mortgage, since you are not making monthly payments.

Reverse Mortgage Requirements: Are You Eligible?

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 Security Home Mortgage, we guide seniors in Utah as they navigate through the process of exploring and obtaining a reverse mortgage. Because of their unique, federally backed opportunities, reverse mortgages have certain requirements and are not available to everyone. If you live in Utah and would like to know about reverse mortgage requirements and eligibility, contact Security Home Mortgage today to learn more.

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 Security Home Mortgage 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.
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 requirements of a reverse mortgage, contact Security Home Mortgage today. We have helped hundreds of clients in Utah achieve financial security while continuing to live in their homes with reverse mortgage.