HUD Reverse Mortgage Eligibility

Homeowners must meet the following criteria in order to be eligible for a HUD reverse mortgage:

- Homeowner must be age 62 or older.

- The home must be owned free and clear or have a mortgage balance that can be paid from equity.

- The home must be a principal residence.

- The property must be a single-family home, a one-to-four unit dwelling with one unit occupied by the applicant, a manufactured home (mobile home), or a unit in condominiums or Planned Unit Developments.

- The property must meet minimum property standards.

Homeowners that qualify can receive payments in a lump sum, on a monthly basis, or on an occasional basis as a line of credit. At a later date the payment options can be restructured if circumstances change.

Guidelines on HUD Reverse Mortgage Amounts

The amount that can be borrowed on a HUD reverse mortgages is determined by the following criteria:

- The borrower’s age - The older the borrower the more that can be borrowed against the value of the home

- The loan interest rate - Obviously the lower the interest rate the more that can be borrowed.

- The home’s value - There is no hard limit for home value to qualify for a HUD reverse mortgage, but the amount that may be borrowed is capped by the maximum FHA mortgage limits for an area. This means that owners of a high priced home can’t borrow any more than the owners of homes valued at the FHA limit.

There are no asset or income limitations on borrowers receiving a HUD reverse mortgage.

Unlike ordinary home loans, a HUD reverse mortgage does not require repayment as long as the home remains the borrowers primary residence. When the home is sold the Mortgage company recovers their principal, plus interest, and the remaining value of the home goes to the homeowner or to his or her survivors. Should the sales proceeds not cover the amount owed, HUD will pay the mortgage company for any shortfall.

The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage. Typically the mortgage company pays for this insurance and charges it to the borrower’s principal balance. This FHA reverse mortgage insurance can make HUD’s reverse mortgage program less expensive to borrowers than private programs without FHA insurance.

A home mortgage is something that allows you to buy a house even if you do not have enough money to pay for it right away.  This is made possible by borrowing money from someone and paying it back in monthly installments.  The person who lends you money is called the home mortgage lender.  The home mortgage lender lends you money for a specific period (up to 30 years) during which you are expected to pay back the money in monthly installments.  There are certain terms and conditions associated with the home mortgage agreement and these terms and conditions govern the home mortgage throughout its tenure.  Among others, the most important thing is the interest rate that the home mortgage lender charges you.  Interest charges are the means through which the mortgage lenders earns on this financial transaction called home mortgage. 

Most home mortgage lenders offer various home mortgage schemes/options.  The most important variation in these schemes is in terms of the interest rate and the calculations related to it.  In fact, most home mortgage options are named after the type of interest rate used for that option.  Broadly speaking, there are two types of home mortgage interest rates - FRM (fixed rate mortgage) and ARM (adjustable rate mortgage).  For FRM, the interest rate is fixed for the entire tenure of the home mortgage loan.  For ARM, as the name suggests the home mortgage rate changes or adjusts throughout the tenure of the home mortgage.  This change or adjustment of mortgage rates is based on a pre-selected financial index like treasury security (and on the terms and conditions agreed between you and the mortgage lender).  That is how mortgage works.

No matter what type of home mortgage you go for, you always need to pay back the entire home mortgage loan (with interest) to the mortgage lender.  Failing to pay back the mortgage lender can result in foreclosure on your home and the mortgage lender can even auction it off to recover the remaining debt.

Therefore, home mortgage is a wonderful means of getting into your dream home much earlier in your life.  Without this concept, you would have to wait for a long time for getting into that dream home.  Really, a home mortgage is one of the best concepts from the world of finance.