Reverse mortgages from HUD can be a great way for seniors to get extra money for retirement. With a HUD reverse mortgage, older people can use the equity in their homes without having to pay it back.
HUD Reverse Mortgage Eligibility
To be eligible for a HUD reverse mortgage, a homeowner must meet the following requirements:
- Homeowner must be age 62 or older.
- The home must be free and clear or have a mortgage balance that can be paid from equity.
- The home must be the person's main home.
- The property must be a single-family home, a one-to-four-unit dwelling where the applicant lives in one of the units, a manufactured home (mobile home), or a unit in a condo or PUD.
- The property must meet certain requirements.
Those who qualify can get payments all at once, every month, or as a line of credit that they can use when they need it. If things change, the payment options can be changed at a later date.
Guidelines on HUD Reverse Mortgage Amounts
With a HUD reverse mortgage, the amount you can borrow is based on the following factors:
- How old the borrower is - The value of the home can be used to borrow more money if the borrower is older.
- The interest rate on the loan: Obviously, the lower the interest rate, the more money you can borrow.
The home's value: There is no hard limit on the value of a home to qualify for a HUD reverse mortgage, but the amount that can be borrowed is limited by the maximum FHA mortgage limits for an area. This means that people who own homes worth more than the FHA limit can't borrow more than people who own homes worth the FHA limit.
Borrowers who want a HUD reverse mortgage are not limited in what they can own or how much money they can make.
Unlike regular home loans, a HUD reverse mortgage doesn't have to be paid back as long as the home stays the borrower's main home. When the home is sold, the mortgage company gets back their principal plus interest, and the rest of the home's value goes to the owner or to whoever they leave behind. If the money from the sale doesn't cover the debt, HUD will pay the mortgage company the difference.
To pay for this coverage, all borrowers pay an insurance premium to the Federal Housing Administration, which is part of HUD. Most of the time, the mortgage company pays for this insurance and adds the cost to the principal balance of the borrower. The FHA insurance on reverse mortgages can make HUD's programme cheaper for borrowers than private programmes that don't have FHA insurance.
