FAQ #1 – Am I eligible for a reverse mortgage?
To qualify for a reverse mortgage you must be at least 62-years-old if you are single, or co-owners must both be 62 if they are unmarried. In the case of a married couple, only one spouse must be 62-years-old.
You must live in your home as primary residence. (You can still own vacation homes.) You must have enough equity in your home to be able to pay off your home with the proceeds from a Colorado Reverse Mortgage.
Eligibility assessments use an FHA calculation that considers:
- Age of the homeowners
- Property’s value
- Balance on existing mortgages
- Expected interest rate
- Principal lending limit
- A formula regulated by FHA
Your primary residence must be a single-family home, qualified condominium, townhouse, double-wide manufactured home, or a 1 to 4 family owner-occupied property.
The health of the homeowners does not affect Reverse Mortgage eligibility.
The Colorado Reverse Mortgage is an excellent financial planning tool that is used by homeowners from all walks of life to enhance their retirement years. While some need a Reverse Mortgage more than others, the growing popularity of this product is evidence of its benefit in a wide array of financial circumstances.
If you think you or a loved one qualifies, and are interested in finding out more about what a Colorado Reverse Mortgage could do for you, call our office, and we’ll help you sort everything out. You can reach us toll free at: 877-854-1720, or directly at: 719-434-3919. Steve will talk with you personally!
FAQ #4 – Must my home be paid off to qualify for a reverse mortgage?
Some people think their house must be paid off before they can qualify for a reverse mortgage. Nothing is farther from the truth.
Seniors with an outstanding first mortgage or other debt on their home may still qualify for a reverse mortgage. The proceeds of the reverse mortgage, though, must first be used to pay off those debts.
Many seniors are finding they can use a reverse mortgage to pay off their existing mortgage, or to pay off other debt. The important thing is how much equity they have in their home.
For many seniors, the equity in their home is their largest single asset, yet it is unavailable to use unless they take out a home equity loan. But a traditional loan doesn’t free up the equity without penalty, because the money has to be paid back, with interest.
A Colorado reverse mortgage, on the other hand, taps into home equity without creating new monthly payments, and without requiring the money to be paid back during a person’s lifetime. Instead of making payments, the cash flow is reversed, and the senior receives payments or cash from the bank. Thus the title “reverse mortgage”.
So if you still owe money on your home, that alone does not disqualify you from getting a reverse mortgage. To learn more about whether you qualify and what the benefits to you may be, call our office at: (719) 434-3919. Steve will talk to you personally!
FAQ #7 – Why do I need counseling before I can get a reverse mortgage?
Counseling is a very important consumer protection required by law for the federally insured reverse mortgage (Home Equity Conversion Mortgage, or HECM). The purpose of counseling is for you to meet with an independent third party who can review your circumstances and recommend whether a reverse mortgage is the best option for you, and determine if there is a better option. They also ensure that all borrowers are mentally competent.
You can be counseled in person or over the phone from a HUD-approved counseling agency. Steve will provide you with a list of at least nine counseling agencies to choose from.
Since 2010, HUD has required counselors to pass an exam before they are eligible to meet with perspective borrowers. They must also meet continuing education requirements, so that they are kept informed about industry developments and product changes. Your counselor will follow a strict set of protocols that dictate what must be covered during the counseling session.