While they have become more popular, reverse mort💛gages certainly aren’t right for everyone. To decide if one is right for you, you need to know how they work and what their requirements are. Qualifying for a reverse mortgage backed by the United States Department of Housing and Urban Development (HUD), for example, requires being age 62 or🎃 older, living in the home as your principal residence, and having no federal debt.

It’s also worth noting that those who don’t have enough equity to make a reverse mortgage worthwhile, or who would simply prefer an 澳洲幸运5开奖号码历史查询:alternative, have other options.

What Is a Reverse Mortgage?

A 澳洲幸运5开奖号码历史查询:reverse mortgage allows you to take out a loan by using the 澳洲幸运5开奖号码历史查询:equity in your home as 澳洲幸运5开奖号码历史查询:collateral. Instead of the borrower making loan payments, the entirety of the loan will not come due until the borrower dies, moves out for more than 12 consecutive months, or sells the house. Reverse mortgages are meant to let older people access funds, providing extra cash that can be put ⛦towar♏d healthcare expenses and other needs.

The limits for a 澳洲幸运5开奖号码历史查询:home equity con♍version𓂃 mortgage (HECM)—a reverse mortgage that is backed by the federal government—have been increasing. However, the most that the U.S. 澳洲幸运5开奖号码历史查询:Department of Housin💎g and Ur🎶ban Development (HUD) will let anyone take out in 2024 is $1,149,825.

What Are Reverse Mortgage Requirements?

Among the 澳洲幸运5开奖号码历史查询:requirements for an HECM, the most common reverse mortgage, are that you be age 62 or older, that the home is your 澳洲幸运5开奖号码历史查询:principal residence, and that you have no federal debt. Those who go through with a reverse mortgage will also have to undergo 澳洲幸运5开奖号码历史查询:counseling with an agency approved by HUD.

How Much Home Equity Do You Need?

Perhaps the most important eligibility requirement for an HECM is how much home equity you have. Unfortunately, 澳洲幸运5开奖号码历史查询:the exact amount that you need to get an HECM is unclear. HUD simply says that you must own the property outright or have “paid down a considerable amount.” Most financial advice says that you should own at least 50% to 55% of the equity in your home to qualify for an HECM. You also must have sufficient financial reserves to meet ongoing expenses, such as 澳洲幸运5开奖号码历史查询:property taxes, 澳洲幸运5开奖号码历史查询:insurance, and 澳洲幸运5开奖号码历史查询:maintenance.

Because the loan is secured with home equity, the amount of that equity will affect how much money you can get. If you don’t own your home outright, the funds will be used first to pay off your remaining mortgage. You will then get what’s left over as a lump sum, in regular monthly installments, as a 澳洲幸运5开奖号码历史查询:line of credit, or as a combination of the latter two.

What if You Don’t Have Enough Equity?

Reverse mortgages represent one way to 澳洲幸运5开奖号码历史查询:get the equity out of your home, but they aren’t the only way. If you don’t qualify f🃏or ♎a reverse mortgage but still want to turn your equity to cash, there are options that you can consider.

The 澳洲幸运5开奖号码历史查询:Consumer Financia🌄l Protection Bureau recommends several alternatives to reverse mortgages, beginning with home equity loa🥂ns and home equity lines of credit (HE༒LOCs). Like ꦬreverse mortgages, home eജquity loans and HELOCs will let you take out money secured against your home equity. Unlike reverse mortgages, though, these have monthly payments. Ultimately, they may be cheaper, but th꧋ey still rely heavily on equity.

What if you don’t have much equity in the firꦡst place? Well, in that case, you might:

• Refinance: It’s not always advisable to 澳洲幸运5开奖号码历史查询:refinance your mortgage, so making this decision requires careful thought. Still, a refinance can potentially reduce your interest rate, 澳洲幸运5开奖号码历史查询:consolidate debt, and/or tap equity.
  
• Get government assistance: If the problem is expenses that pile up, there are government programs offering assistance in making some of those payments. You can find them through your county or town tax office or through the U.S. 澳洲幸运5开奖号码历史查询:Department of🍷 Health and Human🥃 Services’ Administration for Community Living, a federal support agency for aging and disabled populations.
• Downsize: If you need cash badly, it may make sense to sell your home and relocate to a smaller, less expensive one.
  

The Bottom Line

A reverse mortgage is a financial tool that allows you to turn your home equity into cash, but it’s not the only way to do so. Before deciding to take one out, 澳洲幸运5开奖号码历史查询:you🍸 should carefully weigh the pros and cons and whether or not you meet any requirements.