Reverse Mortgage Essay

As a homeowner, a reverse mortgage offers you the opportunity to gain quick access to a large sum of money based on the partial value of your home. You can use this money on anything you like, including trips, family, household and medical expenses. While contemplating your options, there are several key factors that may impact your decision on whether or not this type of mortgage is right for you.

1. Age and residency matters more than income.

Unlike traditional mortgage loans, there’s no need to worry about making a certain amount of income to qualify. Also, your credit plays no role in lender’s eyes. What does matter is that you are 62 or older, and the owner of a single-family home that is your primary residence. Age works heavily in your favor if you’ve owned your home for many years, and its value has increased steadily over time. Generally, age equates to the amount of equity you can tap into, and homeowners in their 70s and 80s often qualify to borrow up to 70 percent of their home’s value.

Loan documents should include each homeowner living in the residence.

Reverse mortgage arrangements allow senior borrowers to live in the home as long as it serves as their primary residence. Take note that this living arrangement only applies signatories of the loan agreement. That means if there are two homeowners, and only one homeowner is listed on the new mortgage, the other homeowner risks being booted out of the home should the main borrower move into a hospital, special care facility or pass away. Families have faced foreclosure after making this mistake, so be sure to include the names of all homeowners on the reverse