This year, reverse mortgages will undergo yet another transformation in a long line of recent program changes designed to make these loans safer retirement planning mechanisms for the borrowers they serve.
Starting March 2, borrowers age 62 and older will be subject to a financial assessment before they can take out a reverse mortgage. This is true only for new borrowers who decide to get the loan on or after March 2 and does not extend to current borrowers who have taken a loan prior to the effective date.
Established by the U.S. Department of Housing and Urban Development (HUD), which administers federally-insured reverse mortgages (known as Home Equity Conversion Mortgages) via the Federal Housing Administration, the rule was created to minimize the risk of borrowers defaulting on their loans.
Mandatory loan counseling has long been required for all HECM loans before a borrower can obtain a reverse mortgage. But now with the financial assessment, that counseling will be a more in-depth look into your finances that will require you to present a variety of documentation.
What you can do to prepare for a reverse mortgage financial assessment
If the provisions of the financial assessment seems like a lot to process, don’t worry. There are several things you can do to learn more about how to qualify for a reverse mortgage under the new rule.
Let’s say you’ve thought long and hard about the prospect of getting a reverse mortgage and are ready to take the next steps, but you’re still unsure how the new changes fit into your situation.
Give me a call:
Not only is it important for you to do your own homework on reverse mortgages, but it’s even more important you work with a certified reverse mortgage professional who can help answer your questions and help you find a loan that best suits your needs. To better help you navigate the financial assessment, along with all the documentation you’ll need to provide, call me to go over what you will need.