By now you’ve probably heard lots of good things about HECM reverse mortgages. Its attractiveness comes from an ability to take cash out of real estate that’s otherwise a non-liquid asset. As with any financial product, however, it’s not available to everyone. Here are three of the basic requirements to get approved for this interesting provision.
Age
Those who are still in their standard working years, unfortunately, cannot qualify for HECM reverse mortgages. It’s a financial tool designed for seniors to help them get through their retirement years. You may be too young to qualify now, but once you reach the right age, you can start the process, which includes a consultation to make sure you’re a good candidate. If at that point you qualify, your application will go through and you can start receiving the benefits you’re after.
Primary Residence
If you’re a snowbird or own multiple properties, it’s important to know that this provision is only available on your primary place of residence.Some have used it to extract their equity as a lump sum to use as a down payment for purchasing their dream home. The loan completely settles when you sell your home or at death.
Sufficient Equity
Equity is the difference between your property’s original value and appraised potential. If your house is worth slightly more than what you paid for it, though, that small amount of equity likely isn’t enough to take advantage of HECM reverse mortgages. You’ll need a significant amount of potential value to be able to pull cash back out of your home.
If you meet the age, residence, and equity requirements, you’ll have a good chance of qualifying for this attractive financial product. The additional income doesn’t come with restrictions, so you can feel free to use it as you please.
