A great way to take advantage of your home’s built-up equity is by applying for a reverse home mortgage. Unlike a traditional mortgage, Mortgage Capital’s reverse home mortgage is where the lender pays the homeowner. 

What makes it enticing for homeowners is that there is no need to pay until you can’t maintain your home or you no longer live there.

If you’re 62 or older and own your home, we can help you tap your home’s equity at Mortgage Capital.

Reverse Home Mortgage Loan Requirements

Property Type

To be eligible for a reverse home mortgage loan, you must first own a house, a condo, a townhouse, or any home as long as it was built on or after June 15, 1976.

Age, Equity, and Fees

One of the major benefits of reverse home mortgage loans is that there is no required income or credit score, but there are specific requirements you must have. Here are some of them:

• You must be at least 62 years old.
• Must own either a home or.
• Must have a substantial amount of equity (at least 50%).
• Applicants must also pay several fees (an origination fee, an upfront mortgage insurance premium, other standard closing costs, ongoing mortgage insurance premiums (MIPs), and sometimes loan servicing fees).

Counseling

First, the US Department of Housing and Urban Development (HUD) requires all applicants to undergo a counseling session.

Usually costing around $125 and lasting 90 minutes, these counseling sessions will discuss how taking a reverse home mortgage loan will affect you financially and other circumstances.

Counselors will also discuss how a reverse home mortgage loan could affect other eligibility, such as Medicaid.

Collateral Protection

When your application has been approved, you must also understand that you have certain responsibilities to maintain. 

First, the borrower must continuously pay property taxes and homeowners insurance, which may include other fees such as HOA fees. 

Second, the borrower must also maintain the property in good repair.

If the borrower no longer lives on the property, they must repay the loan by selling the house.

What is beer? A Reverse Mortgage Loan or a Home Equity Loan?

Compared to reverse mortgage loans, the equity in your house is used as collateral in a home equity loan. The funds are given all at once, and the borrower pays the loan over time in equal amounts.

Also, a home equity loan is much stricter as it is based on the borrower’s credit score, income, DTI ratio, and equity.

Although less expensive, the lender will start the foreclosing procedure if the borrower can’t pay. 

But primarily, home equity loans are more flexible and can be used for any situation.

What is the maximum loan amount for a Home Reverse Mortgage Loan?

After approval, the borrower will start to receive proceeds, which will be based on the lender and your payment plan.

Based on HECM, the amount that can be loaned is based on several factors, such as:

• The youngest borrower’s age, 
• the loan’s interest rate,
• Your home’s appraised value 

But you cannot borrow 100% of your home’s worth; most allow only 60% of it. After all, part of the home equity will be used to pay the expenses for the loan, mortgage premiums, and interest.

If this is too complicated for you, don’t worry. At Mortgage Capital, this process will be much easier and quicker for you, as we will guide you along the way!

How to Apply for a Reverse Mortgage Loan?

Step 1: Review and Assess Eligibility

The first step in the application process is to meet a loan officer who will help you compile all requirements and documents. The loan offer will also give you the estimated amount you will receive and other payout options.

Here at Mortgage Capital, we have specialists to help guide you through the process and provide a smooth application and loan closing process.

Step 2: Mandatory Counseling

You will then undergo a counseling session approved by the US Department of Housing and Urban Development. The counselor will discuss how taking a reverse home mortgage loan will affect your finances and other eligibility.

Step 3: Submit the Application

After receiving a counseling certificate, your advisor will guide you through the application process. Your advisor will also compile all your requirements, such as your recent photo ID, your homeowner’s insurance policy, and your property tax bill.

Step 4: Property Appraisal

Your home will be appraised to determine its market value and the official amount you can borrow.

Step 5: Loan Processing and Underwriting

The lender will then check to verify your requirements and documents. Then, an underwriter will review your application to check if you have all the requirements and approve your loan.

Step 6: Loan Approval and Closing

After your loan is approved, the lender will notify you, and you must sign all documents to close the loan application. A three-day waiting period will occur before you start receiving your payment.

How many home mortgage loans can you have with a Reverse Mortgage in Florida?

In Florida, residents have four loan options when applying for a reverse mortgage.

Home Equity Conversion Mortgage (HECM)

Backed by the US government, the Home Equity Conversion Mortgage (HECM) helps senior citizens gain money by converting their home equity into cash. The seniors will then use the money for their needs, such as day-to-day expenses and healthcare.

Jumbo Reverse Mortgages

For individuals who own high-value properties, the jumbo reverse mortgage is designed to exceed lending limits set by the federal government.

Reverse Mortgage for Purchase

Also known as HECM for Purchase, the reverse mortgage for purchase allows senior citizens to buy a new home while applying for a reverse mortgage simultaneously. This makes it appealing for those looking to expand their list of properties or relocate.

Single-Purpose Reverse Mortgages

Considered the most strict option, this loan can only be used for certain purposes, such as home repairs or property taxes. Although less flexible, this option is much cheaper and suited for specific needs.

Reverse Home Mortgage Loan Limits 2024

As of 2024, the maximum amount for a home reverse mortgage sits at $1,149,825.

This limit is based on the property’s maximum value, which is also used to calculate the loan amount you will receive

Contact us to learn more.