The Reverse Mortgage for 55+ program is a non-HECM reverse mortgage option, it has different guidelines than the federally insured FHA HECM reverse mortgage or home equity conversion mortgage.
The 55+ reverse mortgage is available in either a lump sum or a line of credit option. I created a video that explains both options, just click here to watch it or continue to read and there will be another link to the video below.
The loan amount is determined by the age of the youngest borrower (at least 55), equity in your home which is determined by a lender appraisal(s), prevailing rates and a moderate credit rating.
When income qualifying, the new reverse monthly mortgage payment is not included as a debt which makes it easier for qualifying vs. a conventional loan. Credit report related payments such as credit cards, auto loans and property tax and homeowner’s insurance payment history will be factored into the equation as well as a residual income figure, which is required income left over after debts are paid. The amount of residual income differs on how many people live in the home and what part of the country in which you reside. There is no debt – to income ratio as in conventional lending.
Paying off debt with the loan proceeds to bring numbers in line is allowed to help the income qualifying process if need be as well. On HECM reverse mortgages, this is not allowed.
The loan must be placed on your owner – occupied home, the home can not be rented out at any time, and spouses or other people on title to the home who are less than 55 years of age must go through a process so that they understand they are not on the loan, do not have access to funds and if the older spouse passes away, the loan must be paid off within several months following the death of the older loan holder. The HECM reverse mortgage has differing rules on this issue.
The 55+ non HECM line of credit option is very similar to a bank HELOC. The 55+ line of credit is open for use for 10 years, can be closed if property values drop without notice, but no monthly payments are ever required to pay it back as on all reverse mortgages.
The available credit line grows each month currently at a 1.5% fixed rate. This means your available amount to use goes up at the end of each month % rate for 7 years, after that the growth rate ceases however, the credit line stays open for usage for a total of 10 years.
The 55+ reverse mortgage is being used by all kinds of people for different reasons. COVID restrictions resulted in a loss of income for wage earners and self-employed people. The 55+ line of credit gave much needed cash flow and helped these people stay in their homes. Click here to watch an in – depth video on how the 55 years of age reverse mortgages work.
The 55+ reverse mortgage loan can be used in divorce situations as well. Click here to watch a video on how a reverse mortgage works in a divorce situation.
Let me know the specifics of your situation by filling out some information on the contact form and I can create a video for your unique situation and send to you. I look forward to hearing from you!
Warm regards,
KW