Table of Contents
- 1 What disqualifies you from getting a reverse mortgage?
- 2 Is a reverse mortgage a good idea for seniors?
- 3 What are the income requirements for a reverse mortgage?
- 4 What can you do instead of a reverse mortgage?
- 5 Does a reverse mortgage affect my Social Security?
- 6 What happens if you inherit a house with a reverse mortgage?
- 7 What should I do when my reverse mortgage loan comes due?
What disqualifies you from getting a reverse mortgage?
A reverse mortgage may not be a good idea if: You currently have no mortgage, or a very low mortgage balance. You’re underfunded for retirement. You don’t have enough income for a regular mortgage or home equity loan. Your retirement income is very low.
When should you not get a reverse mortgage?
Any borrower on a reverse mortgage must be at least 62 years old. If you’re married and your spouse isn’t yet 62, getting a reverse mortgage is not ideal. While new laws protect your non-borrowing spouse from losing the home if you die first, they can’t receive any more reverse mortgage proceeds after you’re gone.
Is a reverse mortgage a good idea for seniors?
If you’re an older homeowner who plans to stay put, a reverse mortgage may be a sensible way to help fund your golden years. This is especially true for seniors whose spouses are also over age 62 and can be listed as co-borrowers on the loan.
Why Are reverse mortgages a bad idea?
Because they often involve high fees—and the interest accrues on an increasing loan balance—reverse mortgages are an expensive way to borrow money. These added costs can cut into your home equity and reduce your family’s inheritance when you die.
What are the income requirements for a reverse mortgage?
No. A reverse mortgage does not require you to make monthly repayments so there are no income requirements such as with a traditional Mortgage or Home Equity Loan.
Who owns the house in a reverse mortgage?
A reverse mortgage is a rising debt, falling equity loan since you are taking money out of your home and since you make no payments, the balance goes up and your equity goes down. But as with either loan, you always own the home and any equity in the property belongs to you or your heirs.
What can you do instead of a reverse mortgage?
5 Reverse Mortgage Alternatives
- Sell And Downsize Your Home. One of the reasons homeowners get a reverse mortgage is because it can help them stay in their home.
- Refinance Your Current Mortgage.
- Take Out A Home Equity Line Of Credit (HELOC)
- Apply For A Home Equity Loan.
- Rent Your Space To Others.
Do both spouses have to be 62 for a reverse mortgage?
A reverse mortgage allows homeowners to use the equity in their home to take out a loan, but borrowers must be 62 years or older to qualify for this type of mortgage. Some lenders have actually encouraged couples to put only the older spouse on the mortgage because the couple could borrow more money that way.
Does a reverse mortgage affect my Social Security?
Receiving funds from a reverse mortgage loan will not impact your Social Security. Both Social Security and Medicare are non-means-tested programs, meaning these public benefits are not dependent on your amount of income, savings, capital, or assets, including how much money you receive from a reverse mortgage loan.
Do you need proof of income for a reverse mortgage?
No. Since you don’t make any monthly payments on a reverse mortgage; proof of your income and/or high credit scores are NOT required. A credit check on your credit reports will only be used to confirm if you have any federal tax liens or other items that may affect qualification.
What happens if you inherit a house with a reverse mortgage?
If your heirs need to sell the home Some heirs may lack funds to pay off the loan balance, and may need to sell the home in order to repay the reverse mortgage loan. With a reverse mortgage loan, if the balance is more than the home is worth, your heirs don’t have to pay the difference.
Can I get a reverse mortgage for my newly married spouse?
For newly married spouses, the only way to still ensure that they are covered by the terms of a reverse mortgage if that is your goal, is to obtain a new loan in both your names or with them being a current “eligible non-borrowing spouse” now at the time you take out the new loan if they are not yet 62 years of age.
What should I do when my reverse mortgage loan comes due?
Make sure your adult children or any family members living in the home know what to expect when your reverse mortgage loan comes due. If they wish to keep the home, contact your reverse mortgage company for written information that explains their options.
What is an eligible non-borrowing spouse for a reverse mortgage?
The reason we usually see a non-borrowing spouse is because the spouse is not yet 62 years of age and every reverse mortgage borrower under the HUD program must be at least 62 years of age and in that case, if they meet the other criteria, they would be an eligible non-borrowing spouse for loans closed now.