A reverse mortgage is a special type of home loan that allows a borrower to convert a portion of the equity in their home into cash. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence or fails to meet the obligations of the mortgage. A borrower can also use a HECM to purchase a primary residence if they are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property being purchased.
How to Qualify for a Reverse Mortgage and LTV’s?
To be eligible for an FHA HECM, you must:
• Be 62 years of age or older (minimum age at application signing)
• Have considerable equity
• Occupy the property as your principal residence
• Participate in a consumer information session given by a HUD- approved HECM counselor
• Financial Assessment is now part of the underwriting decision as of April 27, 2015.