A reverse mortgage helps you convert your home equity into funds that may be the need of the hour. It is quite similar to a traditional line of credit that you can avail from banks and financial institutions. As it is with any mortgage, the title of the property remains in your name and you get to enjoy certain additional benefits with a reverse mortgage. The Department of Housing and Urban Development (HUD) commonly offers a Home Equity Conversion Mortgage (HECM) for eligible applicants.

Not everyone can apply for this exclusive line of credit as reverse mortgage eligibility is reserved only for seniors over a certain age.

Reverse mortgage eligibility criteria
Here are the basic requirements to qualify for a reverse mortgage:

• The first requirement is that as a homeowner, you must be over the age of 62 to apply for the line of credit. If your spouse is under the age of 62 but meets certain special criteria mentioned, they can apply for a reverse mortgage subject to the approval terms and conditions.
• The home title should be in your name, which should also be your permanent address for a major part of the calendar year. A reverse mortgage cannot be taken on multi-unit buildings or property that is considered commercial in the eyes of the law. Condos and mobile or manufactured homes that don’t meet the HECM requirements don’t qualify for a reverse mortgage.
• If you are currently paying off the original mortgage taken for the home, you can still apply for a reverse loan. This is subject to you paying off the balance amount before taking up the new debt obligation. Note that banks will consider your application only if they deem that you are in a credible financial position to pay off existing debts before they issue a new loan.
• You must not neglect your duties toward Federal taxes and government aid. If you owe the government, it is expected you pay what these institutions levy on your borrowing. This is one of the more crucial criteria for reverse mortgage eligibility as it reflects the applicant’s credibility. One of the advantages, in this case, is the fact that you can use a reverse mortgage to pay off such an obligation once it is issued.
• Applicants must also be willing to set aside an amount from the funds taken for a reverse mortgage to pay for property taxes, home insurance costs, and even repairs and maintenance.

Once you have met the aforementioned reverse mortgage eligibility criteria, a counseling session is scheduled by an HUD-approved agency. This is done to assess your credibility, review eligibility to confirm the issuance of new funds, and to explain the financial implications of taking up a reverse mortgage.

The post-approval amounts are available to borrowers in the following ways:

• Line of credit where you can access the amount at any given time after submitting a written application.
• Term payments where you receive fixed installments for a fixed tenure.
• Tenure payments where you receive a fixed amount even if the value of the loan surpasses the value of your home.