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Learning about reverse mortgages can be very beneficial for you once you reach retirement age. The reverse mortgage program is a very popular way for retirees to create a supplemental source of income. However, to take advantage of this type of program, you will have to meet certain borrower qualifications, which are discussed below.
A reverse mortgage is an arrangement with a lender that will allow you to access money from your home equity. You will be receiving monthly payments from the lender until they have purchased a certain amount of home equity. You can also set up a line of credit that you can access whenever you want if you would prefer not to receive payments. There will be no requirement for you to make payments of any kind during this mortgage process.
Unfortunately, this program is not available to everyone. In order to qualify for a reverse mortgage, you will have to meet age requirements. As of April 2010, you have to be at least 62 years old in order to qualify for a reverse mortgage loan. This applies to both you and your spouse if you are married. The lender is going to look at the age of the younger spouse in order to determine if you are eligible. Therefore, if you are 65 and your spouse is only 50, you will not be able to qualify for a reverse mortgage until your spouse reaches the age of 62.
Another requirement deals with the existing mortgage on your home. You have to have a home that is completely paid off, or you have to have a very small existing loan balance. Every lender is going to have a different maximum for what your existing loan balance can be. Just know that you should be very close to paying off your existing mortgage if you want to qualify for this type of loan.
In order to qualify for a reverse mortgage, you have to have the loan on your primary residence. You cannot set up a reverse mortgage on your vacation home or on a rental property. It has to be the home that you are currently living in the majority of the time. That does not necessarily mean that it has to be a single-family residence. It can be a multi-family residence if you are currently living in one of the units. It can also be a condo or a manufactured home.
You will also have to participate in an informational session with a certified counselor before you will be eligible to participate in a reverse mortgage program. The counselor will go over the entire process with you and make sure that you understand how the reverse mortgage program works. At that point, you should be able to qualify for a first mortgage.
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