Four Factors for Reverse Mortgage Qualification
- the age of the youngest borrower on title to the home
- the interest rate for the type of loan requested
- and for the HECM loan, the lesser of the appraised value of your home or the national lending limit set January 1, 2021 at $822,375.
- for proprietary/jumbo loans, the appraised value OR the lesser of two appraisals when the home is valued at $2,000,000 or above
If you are 92 years old, you will qualify for more than if you are just 62 years old. Available loan proceeds vary with the type of loan. For HECM fixed rate loans, the borrower must take all proceeds available at close as a lump sum, but are restricted to “mandatory obligations” plus 10%. For adjustable rate loans, the available loan proceeds can be paid to you in a cash advance, a fixed amount per month (“term”), equal monthly payment for as long as you occupy your home (“tenure”), a line of credit (to withdraw money on an as-needed basis), or a combination of these choices. However, depending on the value of your “mandatory obligations”, you may be limited to draw no more than 60% of the Principal Limit in the first year of the loan. Most importantly, it is always your home – the title always remains in your name. You are not obligated to make any mortgage payments while living in the home. Instead, interest is added to the loan and paid when you sell or move out of the home. The loan is due and payable if you have failed to comply with the loan terms (property tax and home owners insurance payments, for example) or when when the last borrower or eligible non-borrowing spouse leaves the property. If the property is bequeathed, your heirs can either sell the home or refinance the home and pay off the mortgage.