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Do I Need Good Credit For a Reverse Mortgage?

“My house is worth a lot, My Income is very low, and my credit is bad for lots of reasons. Can I still get a reverse mortgage on my home?”
	Senior , Homeowner Bad Credit

Bottom Line is…. Yes

There are little to no credit or income requirements, since homeowner borrowers don’t assume any payment obligation. But to be eligible there a few basic requirements, owners must be 62 or older, and must be an owner/occupier for their permanent residence. Not all properties are eligible for these types of mortgages. Eligible properties generally include one- family units, condominiums, manufactured housing, and houses in planned unit developments. 2-4-family units may or may not qualify. Mobile homes and co-ops are not eligible. Talk us to us about your circumstances

To qualify for a reverse mortgage, you must be at least 62 and have paid off all or most of your home mortgage. Income is generally not a factor, and no medical tests or medical histories are required. If you seek an HECM, you also must undergo free mortgage counseling from an independent government-approved “housing agency.” Financial institutions offering proprietary reverse mortgages may require similar counseling or homeowner education.

The amount you can borrow depends on your age, the equity in your home, the value of your home, and the interest rate. If it’s an HECM, federal law limits the maximum amount that can be paid out.You can be paid in a lump sum, in monthly advances, through a line of credit, or a combination of all three.

Common Features
Reverse mortgages offer special appeal to older adults because the loan advances, which are not taxable, generally do not affect Social Security or Medicare benefits. Depending on the plan, reverse mortgages generally allow homeowners to retain title to their homes until they permanently move, sell their home, die, or reach the end of a pre-selected loan term. Generally, a move is considered permanent when the homeowner has not lived in the home for 12 consecutive months. So, for example, a person could live in a nursing home or other medical facility for up to 12 months before the reverse mortgage would be due.

However, be aware that:

· Reverse mortgages tend to be more costly than traditional loans because they are rising-debt loans. The interest is added to the principal loan balance each month. So, the total amount of interest owed increases significantly with time as the interest compounds.

· Reverse mortgages use up all or some of the equity in a home. That leaves fewer assets for the homeowner and his or her heirs.

· Lenders generally charge origination fees and closing costs; some charge servicing fees. How much is up to the lender.

· Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.

· Because homeowners retain title to their home, they remain responsible for taxes, insurance, fuel, maintenance, and other housing expenses.