The FHA reverse mortgage helps seniors tap into their home’s equity without having to worry about repaying the loan until they move or pass away. In order to qualify for the loan, you must own a home and be at least 62 years old. As long as you are 62-years old, there isn’t an age limit as far as how old you can be. In fact, the older you are, the more money you can receive from your home’s equity.
How Reverse Mortgage Help Seniors
As you age, your needs change. If you don’t have enough money saved for retirement, you may find yourself looking for ways to get funds. If going back to work isn’t an option, you may want to consider a reverse mortgage. The mortgage helps seniors supplement their retirement income for living expenses, medical expenses, or even bucket list items. You can use the funds however you see fit. Generally, the older a senior is, the more they need the money for daily living and/or medical services. As long as you don’t have an existing mortgage balance on the home or it’s a small balance that can be paid off with the HECM, you may qualify for the loan whether you are 65 or 85 years old.
Getting Financial Advice
As seniors get older, loan officers for the reverse mortgage are taught to watch for signs of diminished mental capacity. In other words, loan officers might be more careful about who they approve for the loan. It’s always best to have family members or a financial advisor help the senior with the decision so that everyone is on the same page. As a part of the process, HUD requires seniors to take reverse mortgage counseling through HUD so that everyone is aware of how the loan affects the home in the future.
Older Seniors Benefit More Despite the No Age Limit
While there isn’t an age limit for the reverse mortgage, older seniors are able to get more money from the loan. The FHA bases the amount you can receive based on the age of the youngest borrower. If you and your spouse are on the loan, the younger borrower’s age prevails. The older the youngest borrower is, the more equity you can tap into on the home. This is strictly because an older senior’s life expectancy is shorter, so there isn’t’ a risk of the senior running out of equity during their lifetime with the FHA limiting how much you can take at one time.
No matter how much money you are able to take, though, you must prove that you can manage the house and its expenses. This includes real estate taxes and homeowner’s insurance as well as the general upkeep of the home. Generally, lenders approximate 1% of the home’s value for annual home maintenance. You’ll need to prove that you can afford this amount before a lender will approve you for the reverse mortgage, no matter your age or the amount of equity you have in the home. While there isn’t an age limit for the HECM reverse mortgage, you should give it careful thought. We know it’s impossible to predict how much money you’ll need in your lifetime, but letting the FHA guide you with the maximum loan amounts and taking the counseling seriously can help you make the decision that suits you the best.