If you’ve been turned down for a traditional home equity line of credit (HELOC), you may still be able to get the money you need by tapping into your home’s equity using a reverse mortgage. While a HELOC may not be an option for you during these tight credit times, if you’re a homeowner aged 62 or over with sufficient equity in your home, it’s relatively easy to qualify for a reverse mortgage.
Many reverse mortgage homeowners have turned their home equity into tax-free cash to help meet their needs and satisfy their wants. There are several benefits a homeowner can take advantage of with a reverse mortgage, such as:
Eliminate Monthly Mortgage Payments
A reverse mortgage loan can eliminate your monthly mortgage loan payment and typically does not require loan payments until the homeowner moves out of the home for 12 consecutive months or passes away. (Like all homeowners, you still are required to pay your real estate taxes, insurance and meet any other loan obligations.) By comparison, a HELOC must be repaid in monthly payments.
Income & Credit Requirements
Eligibility requirements for a reverse mortgage generally do not include a minimum income or credit score. By comparison, a HELOC requires stable income and a solid credit score.
Amount You Can Borrow
The amount you can borrow depends primarily on your age, the current interest rate, and the appraised value of your home, sales price or FHA’s mortgage limits, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you may borrow.