Posted onNovember 07/2016
A reverse mortgage allows homeowners to draw on some of their home equity. This is particularly beneficial for seniors who live alone in their own homes. In this arrangement, the recipient receives a monthly allowance from the lending institution. Unlike with a regular mortgage, the recipient does not pay monthly instalments, but is still obligated to pay the costs that come with homeownership, such as insurance, property taxes and maintenance. Qualification for this type of mortgage depends on various factors such as property type. The following types of properties are eligible for a reverse mortgage.
This is the most common type of home that qualifies for a reverse mortgage. Seniors often live alone; therefore, it makes sense to benefit financially from your home without having to sell it. The main criterion to be met is that the home in question is the principal residence.
Multi-family homes that contain up to a maximum of four units can qualify for a reverse mortgage. However, in order to qualify, one of the units must be the main residence.
In the US, condominiums need to be on an approved list in order to qualify for a reverse mortgage. Check with your lender to see if your condominium qualifies for a reverse mortgage.
There are some properties that may qualify for a reverse mortgage depending on the size, time of construction and intended purpose.
Manufactured homes may qualify depending on factors such as the date of construction and the type of dwelling as well as the floor size.
Homes situated on farmland can also qualify for a reverse mortgage, but the value of the mortgage is calculated according to the house itself rather than the entire farmland. Furthermore, the farm must not be income producing.
You should consider all the advantages and disadvantages of a reverse mortgage before making any decision. You should also gather as much information about your home, such as its value, its age, type of property and whether it is your principal residence. A reverse mortgage is not something that should be taken lightly and you should make an informed decision before signing anything. At Northwood Mortgage, we have specialists who can help you with this. They can advise you on all your options—including whether or not a reverse mortgage is the best way to take advantage of your home.