In March of this year new reverse mortgage rules are due to take effect. Generally, a reverse mortgage allows a homeowner to obtain a loan using the equity in the individual’s home. A person is eligible to take out a reverse mortgage if they are 62 years of age or older. The loan obtained through the reverse mortgage does not have to be repaid until the individual moves, sells or passes away. The homeowner must continue to pay property taxes and homeowners insurance premiums. Prior to the new rule, any individual 62 and older who did not already have a mortgage on their home was allowed to take out a reverse mortgage. However, effective March 2, 2015 homeowners will now have to pass a financial assessment before they can take out a reverse mortgage. The financial assessment confirms the individual’s ability to pay the property tax and insurance premiums on the property through an assessment of income and credit histories. This new rule applies to reverse mortgage loans under the Home Equity Conversion Mortgage (HECEM) program. For those who do not meet the financial requirements for the loan or for those who meet the credit requirements but do not have enough income, there are options available to assist in obtaining the reverse mortgage loan.
More information can be found at the following: