Think of getting a reverse mortgage the same as getting a regular mortgage for your house except that the qualification process is much easier and making a house payment is optional.
A reverse mortgage allows senior citizens to turn a portion of the equity in their property into cash. Since the standard mortgage method is reversed, this mortgage is known as a reverse mortgage.
Here’s what you need to qualify:
- Senior citizens that are a minimum or 62 years old or older are eligible for a reverse mortgage.
- Must have at least 50% equity or cash for down payment. Dollar amount varies by age. The older you are the less equity or down payment.
- Financial check/Credit check to make sure you can pay the taxes and insurance on your home.
That’s it! Yes there are other factors that come into play depending on your age, where you live, home value, etc. but the above are the basic qualifications for a reverse mortgage or Home Equity Conversion Mortgage / HECM.
Therefore, the lender makes monthly payments to the borrower rather than the borrower making monthly payments to the lender, compared to a traditional mortgage. It isn’t necessary for the borrower to pay back the mortgage loan until the house is vacated or otherwise sold.
Property owners are not expected to make any month-to-month payments towards the balance of their mortgage loan so long as they live in the house.