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Reverse mortgages typically don't consider credit scores or income, but instead focus on factors like age, home value, and equity. Borrowers must usually be at least 62 years old, have substantial equity in their home (typically at least 50%), and live in the property as their primary residence. Lenders will also conduct a financial assessment to ensure the borrower can afford taxes, insurance, and home maintenance.
The amount of money someone can qualify for depends on several factors, including your age, home value, interest rate, and current mortgage balance. Proceeds from a reverse mortgage are used to pay off any existing mortgage.
Reverse mortgages typically don't require repayment until the last living borrower permanently leaves the home. However, you must pay taxes and insurance during the mortgage term. To retain the home when the mortgage becomes due, the borrower or their heirs or estate must pay the loan balance, which may be more than the home's value.
While a reverse mortgage can provide financial flexibility, it's important to consider the potential risks and impacts. These mortgages can affect eligibility for some government programs, like Medicaid and Supplemental Security Income (SSI). If you receive proceeds from a reverse mortgage while on Medicaid or SSI, you must use them immediately. Funds you keep count as an asset and could impact your eligibility.
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