A reverse mortgage loan is specially designed for senior citizens. This loan against the property lets the borrowers pay the EMIs at any time. Rather than taking the regular loan, this loan provides the facility to the retired senior citizens to take a loan according to the current market value of the houses they are living in. They can pay the loan until they shift to another house, or get expired.

Who are eligible for this loan?

As reverse mortgage loan is only applicable for retired senior citizens, there are a few eligibility criteria. These eligibility criteria have been developed and enforced by the HUD. The minimum age which is required for the eligibility of this loan is 62 years. The person who wants to take this loan has to meet all the financial criteria as designed by HUD to apply for this loan.

In addition, there are some other criteria that are developed by the FHA (Federal Housing Administration) which you have to meet simultaneously. This is because it is a type of home loan. The criteria developed by FHA are given below:

• The interest rates are imposed by the FHA.
• The balance of any mortgage loans (if it exists).
• The youngest homeowner’s current age.

Which companies offer this type of loan?

There are many companies which offer reverse mortgage loans, such as Champion Mortgage, One Reverse Mortgage, Financial Freedom Senior Funding, AAG, and others. They have designed the term of this loan in such a way that it can act as a saving for retirement.

What steps should you take to apply for a reverse mortgage?

You have to check the eligibility criteria and apply as loans offered by many lenders differ greatly. The lenders cannot charge any application fee, but have to mention all the necessary points such as loan amounts, interest rates, and fees of the reverse mortgage loan in the application form. Follow these steps:

• After submitting your application, you have to submit an attested certificate of HECM counseling to the company.
• FHA will check the values of your property and give the appraisal.
• Underwriting of liabilities and issues such as bankruptcies, unpaid loan amount and trusts.
• On the closing date, the lender will review the necessary points and sign the notary or the contract paper and provide you with the proposed loan amount.

What are the benefits of a reverse mortgage loan?

There are many benefits of this type of loan for seniors, including:

1. Preserve your wealth

This loan is the best way to save for retirement because it can maximize your wealth simultaneously.

2. Federally insured

Management of HECM and enforcement of rules by FHA and HUD make this loan insured federally.

3. Ownership

You can easily pay the taxes, repair your house, and keep the insurance of the property updated, that too tax-free.

4. Free from barriers

You can use the money for any purposes you decide, to travel, pay for your children’s education, or save for you own retirement.

5. Flexibility

You can start paying off a reverse mortgage at any time you like, in annual, bi-yearly, quarterly or monthly payments.