How to Qualify for a Reverse MortgagePosted by Nick Niesen on October 29th, 2010 To qualify for a reverse mortgage, you must be at least 62 and have paid off all or most of your home mortgage. Income is generally not a factor, and no medical tests or medical histories are required. If you seek an HECM, you also must undergo free mortgage counseling from an independent government-approved "housing agency." Financial institutions offering proprietary reverse mortgages may require similar counseling or homeowner education. The amount you can borrow depends on your age, the equity in your home, the value of your home, and the interest rate. If it's an HECM, federal law limits the maximum amount that can be paid out.You can be paid in a lump sum, in monthly advances, through a line of credit, or a combination of all three. Common Features However, be aware that: · Reverse mortgages tend to be more costly than traditional loans because they are rising-debt loans. The interest is added to the principal loan balance each month. So, the total amount of interest owed increases significantly with time as the interest compounds. · Reverse mortgages use up all or some of the equity in a home. That leaves fewer assets for the homeowner and his or her heirs. · Lenders generally charge origination fees and closing costs; some charge servicing fees. How much is up to the lender. · Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole. · Because homeowners retain title to their home, they remain responsible for taxes, insurance, fuel, maintenance, and other housing expenses. Like it? Share it!More by this author |