If you’ve ever searched for reverse mortgage info, you may know that traditionally the point of entry is age 62. Then, in 2018 some investors opened a reverse mortgage program to 60 year olds. Then, in 2021, another investor lowered their minimum age to 58. Guess What! Reverse Mortgage at age 55 is now a thing…..a real thing.
What is A Reverse Mortgage?
In a nutshell, a reverse mortgage is a unique kind of home loan that allows older homeowners to borrow money, but does not have a monthly payment for as long as you stay in your home. You still own the home though, so you’ll still need to pay property taxes, HOA, and insurance.
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Reverse Mortgage Age 55 Questions & Answers:
Below we’ll discuss a few of the common questions that might arise for this type of loan program. The guidelines are about 300 pages long, so we won’t bore you with too much detail. Here goes!
Question; Is this reverse mortgage at age 55 program insured by FHA?
Answer; No, this loan is not insured by FHA. However, this loan is also a non recourse loan just like the FHA version.
Question; Does This Reverse Mortgage Program Have Credit Score Requirement?
Answer; This loan does and does not have credit score requirements. I’ll explain further. Generally, for now, if you have a 620+ credit score and have paid your installment debts, property charges (taxes, mortgage, insurance) on time for the last 2 years, it’s easy and there may not be any restrictions. If you’re in the 600-619 range, qualifying could be a little more difficult, but not impossible. If your credit score is below 600, you may still qualify, but you’d more than likelhave to have a special tax and insurance escrow account called a LESA.
Question; What is the Minimum Loan Amount?
Answer; The minimum loan amount for the reverse mortgage at age 55 program is $100,000. The maximum loan amount is currently set at $4,000,000.
Question; Can this loan program be done in all of the USA?
Answer; at present (this program was launched on 09/03/2021) the reverse mortgage program that is available to 55 year olds is available in about 20 states. Here’s the current, ever-changing list –> AZ, CA, CO, CT, DC, FL, GA, HI, IL, MI, MT, NJ, NM, NV, OH, OR, PA, RI, SC, & VA.
Question; Do I have to worry about debt to income ratios with this reverse program?
Answer; No, you don’t have to worry about debt to income ratios. However, you do have to show income (liquid assets can be used for income too). Instead of a debt to income requirement, this reverse mortgage program requires that you have about $585 in residual income if you are the only homeowner and about $950 for a 2 person household. In plain English, this mean that your income needs to be about $585 more than your property charges and monthly credit report payments ($585 example for a 1 person household). This is much easier to get than a regular mortgage loan.
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Question; What percentage of my home value can I borrow with the reverse mortgage at age 55 program?
Answer; As of February of 2023, the range is from 28.9% to 30.6% depending on your age (from age 55 – 61). This program is also available for people aged 62 plus and the amount you can borrow increases a little bit with each passing year. And, of course at age 62 the FHA reverse mortgage is a possibility. With that said, here’s the percentage you can borrow at each respective age group:
Age 55 – 28.9%
Age 56 – 29.3%
Age 57 – 29.6%
Age 58 – 29.9%
Age 59 – 30.1%
Age 60 – 30.4%
Age 61 – 30.6%
The amount you can borrow with this reverse mortgage program gets a little bigger with every passing year.
Question; What types of property are eligible for this reverse loan program at age 55?
Answer; Almost all property types are allowed EXCEPT manufactured homes and cooperatives.
Question; Can any lender offer this program?
Answer; Yes, any lender can offer this program the reverse mortgage at the age of 55. Here’s how it works. This program can be done by any lender that chooses to get approved with them. This applies to reverse mortgage brokers and lenders alike. For now, it doesn’t matter if you work with a lender or a reverse mortgage broker, the investor is the same and for now there’s only three investor offering the program.
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