Can anyone apply for a reverse mortgage loan?
No. There are certain requirements you must meet in order to be eligible for a reverse mortgage:
- You must be at least 62 years old.
- The home must be your primary residence.
- You must have paid off most, or all, of your traditional mortgage.
If you still owe money on a traditional mortgage, you must use part of the money from your reverse mortgage to pay off the traditional mortgage. There are limits to how much money you can borrow. So, if you still owe a lot of money on your traditional mortgage, you might not qualify for a reverse mortgage.
Most reverse mortgages today are insured by the Federal Housing Administration (FHA) through its Home Equity Conversion Mortgage (HECM) program. This program requires that you meet with a reverse mortgage counselor to discuss how a reverse mortgage works and how much it will cost you. The counselor must be approved by the Department of Housing and Urban Development (HUD). FHA also requires that your home be in good shape. If your home is poorly maintained, you may need to repair it before you can get a HECM reverse mortgage.
If you have a spouse or other relatives living with you, think very carefully before applying for a reverse mortgage. Couples can apply together as co-borrowers, and for most couples this is the best choice if they decide to pursue a reverse mortgage. When couples are listed as co-borrowers on their reverse mortgage, one spouse can continue to live in the home even if the other spouse dies or has to move to a nursing home. Unmarried couples, siblings, etc., can also apply together as co-borrowers and receive the same rights, as long as both people are over age 62.