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Brea Reverse Mortgage Question - Do We Qualify For a Reverse Mortgage?

Mortgage and Lending with Orange County, Corona, Riverside, Los Angeles NMLS#203003

October 05, 2011 03:35 PM

What are the qualifications for a Brea Reverse Mortgage?

Old Picture of Brea

If you are homeowners and are over the age of 62, you just might. Some things to know in order to determine whether or not you are eligible. First - do you have enough equity? The amount of money you can borrower on a reverse depends upon 3 things.

Age of Youngest Borrower.
Expected Rate
Lesser of the Home Value or FHA Lending Limit. (Currently at $625,500.00 through December 31, 2011)

It is not the normal 80% of home value, more like 50 to 70 percent. The reverse mortgage loan proceeds must be sufficient for paying off all current liens on the property.* Once you know if you have age and equity on your side, then you need to look to the home itself.

Single Family homes in good condition.
Some FHA Approved Condos.
Some reverse mortgage lenders will loan on Manufactured Homes on owned real property with a permanent foundation.

Next, take a look at how you hold title. Do you have a trust? Most, but not all trusts do qualify for a reverse mortgage, however the lender and title company will want to review it before issuing your loan.

What about your credit? Though income and credit score is not an issue, if you have a tax default, federal debt or another FHA loan there may have some hurdles.

It's also wise to self check your income... do you have enough income to keep up with the property taxes, homeowners insurance and maintenance on the home? It's never a good idea to delay the inevitable. If you need to bite the bullet and sell, I'd suggest that you do that rather than have your existing equity eaten away with interest and deferred maintenance. Sorry to be so blunt, but your quality of life is important to me.

Have you taken the required Reverse Mortgage Counseling? Prior to applying for a reverse mortgage all homeowners must complete HECM Counseling and have their certificate in hand. The cost of HECM Counseling is usually around $125, and some agencies will agree to be paid from your loan proceeds, others will want a credit card up front. The certificate is good for 6 months.

The counseling must be provided by a HUD Approved HECM Counseling Agency and provides the senior homeowners with a budget review, alternative solutions and a neutral party perspective. Here's a link to talk with a HUD Approved HECM Counselor.

Your questions and comments are welcomed and if you’d like to ask me a question you can enter into “Comments” or email me at the link to the right.

*If loan proceeds are not sufficient to payoff current liens Borrowers may be allowed to add their own funds to cover the shortage.