There are various factors considered by mortgage lenders AZ before considering seniors for a reverse mortgage. This is the reason why seniors might access different amounts, irrespective of the fact that their home equity is valued at similar amounts. Therefore, let us have a look at the different reverse mortgage eligibility factors.
- The reverse mortgage age requirements
To be eligible for a reverse mortgage, you have to meet certain age requirements. The borrower is expected to be at least 62 years. If you are married, one of the titleholders on the home must meet the age restriction. In addition, in the case of a married couple, both partners should be titleholders in order to take care of the homeowners. Therefore, you are not eligible for the reverse mortgage today, if you are turning 62 years next year. To be eligible, you must have hit the 62 years age mark.
- The Equity Requirements
If you have met the first requirement, the second factor mortgage lenders in AZ will consider is the property that you are borrowing against. The lender wants to make sure that the property has sufficient equity in it, and the remaining equity is sufficient to eliminate any existing mortgages using the reverse mortgage.
Therefore, to be eligible, the reverse mortgage borrower should have at least 50% equity in the property so that they can qualify. Further, it is important noting that here, the precise decision is reached after considering the age and the interest rates. The property equity is simply calculated by taking the value of the property and subtracting whatever is owed to the mortgage lender and the other liens attached to the property.
- The type of property
The third reverse mortgage eligibility requirement touches on the type of property. Ideally, the Federal Housing Administration must approve the property type in order to be allowed to borrow. A reverse mortgage is not available for the bed and breakfast type of property. The working farms also do not qualify for the reverse mortgage. The FHA expects that the reverse mortgage borrower should provide proof of land ownership in which the property is built. In addition, the property should have a permanent foundation as described by the FHA. The FHA qualification is a complex one, and the FHA officials will often be involved where the determination of this eligibility seems complex. Before embarking on the reverse mortgage application process, talk to the lenders’ officers to check if the property meets the FHA eligibility.
The secondary requirements
The three qualification criteria factors we have highlighted herein speak to the primary considerations for the reverse mortgage qualification. There are other additional factors that count when it comes to reverse mortgage eligibility consideration. To be eligible, the applicant should also:
- Provide proof of financial resources that will be used for paying for the property charges. The property charges include home insurance, property tax, and the residents’ association fee, including all other charges depending on the suburb.
- Show proof that he/she is not delinquent on the federal debt
- Provide proof that the borrower is educated on matters of the reverse mortgage, by attending a session with the reverse mortgage counselor.
Therefore, if you meet the requirements as outlined above, you can proceed to apply for a home equity loan.
The reverse mortgage is designed to help seniors to age in place. However, in order to move from the home that you took the reverse mortgage against, you are expected to clear the reverse mortgage. Clearing the reverse mortgage can be difficult given that the borrower lacks an alternative source of income. For persons with heirs, it is expected that if you pass on, the lender will sell off the property to recover the amount. However, the heirs can offer to repay the full amount to save the property from the auctioneers. Note that the lender will foreclose the property in case the borrower stops using the property as a primary residence.