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Borrower Eligibility
  • All borrowers must be 62 and older
  • Must own property and occupy as primary residence
  • Participate in an information counseling session
  • Property must meet FHA property standards
  • Maintain home with needed repairs, property taxes and insurance
Loan Amount Based On
  • Age of youngest borrower
  • Current interest rate
  • Lesser of appraised value or the FHA insurance limit


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Are Reverse Mortgage Lenders Interest Rates Based on Your Line of Credit?

When you apply for a loan with any of the reverse mortgage lenders, you will find that they have a checklist of necessary qualifications. This checklist also helps lenders determine how much money then can lend you.

These are the main items on the checklist of each lender

  • Applicant must be at least 62 years old
  • Applicant must own a home qualified by the US Department of Housing and Urban Development (HUD),
  • Applicant must have already talked with a reverse mortgage consultant certified by HUD.

With reverse mortgages, there are many common myths and misconceptions that prevail. This is not just among seniors but also amongst the general public. One of these myths is that you must have a stellar credit report before you can apply to a lender. Here is the fact: reverse mortgage lenders will not even check your line of credit when you submit your application to the lending party. Reverse mortgage lending companies will only check to see if you have paid your property taxes and if you have any other outstanding government debts.

Another misperception is that the reverse mortgage lending company will check to see if the entire mortgage of your home has been paid. Here is the barebones fact: you can use a portion of your reverse mortgage to pay off the existing loan on your home. After that you can do what you like with the rest of the loan amount.

Additionally, your lender will not own your home when you take out a reverse mortgage. Even in the highly unlikely scenario that interest rates do not work in your favor you still get to keep your own home.

REVERSE MORTGAGES DEFINED

Reverse mortgages are loans that you can take against your home. Unlike ordinary mortgages, you do not make monthly payments to repay the loan. In fact, the loan is only repaid when the house is sold. Under normal circumstances this will only happen when the homeowner dies or permanently moves out of the house.

Interest rates on reverse mortgage loans are based on industry benchmarks such as the LIBOR rate.

Reverse mortgage loans are designed limiting the loan amount so that it never exceeds the value rate of the home. It is possible that due to unpredicted interest rates the total loan amount can exceed the sales proceeds of the house. In this case the US government through the Federal Housing Authority pays the lender the remaining difference. In effect, interest rates on reverse mortgages do not really impact the cash liquidity of the borrower, while he or she is still alive.

Aside from cash payouts, reverse mortgage borrowers can receive the loan through a line of credit. In this case, a line of credit refers to unscheduled installments or payments made to the borrower until the line of credit is exhausted. With a line of credit, the borrower can choose the amount that he or she wishes to take out. Having different payout methods is one of the great appeals that reverse mortgages have. Use the reverse mortgage calculator to see what amount you might be eligible to receive.


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