How Long Before I Turn 62 Can I Apply for a Reverse Mortgage?
A reverse mortgage can be a great way for senior homeowners to supplement their income, pay off debts or fund major expenses. However, there are certain rules that must be followed and certain criteria that must be met before a homeowner can be approved for a reverse mortgage. One of the first eligibility requirements for getting a reverse mortgage is that the homeowner must be 62 years of age or older.
Because reverse mortgages were created specifically for senior citizens, anyone younger than 62 is not eligible for this unique home financing program. However, some homeowners feel confident that a reverse mortgage will be beneficial for them and hope to apply for the mortgage program before their 62nd birthday.
Beginning the application process for a reverse mortgage before the homeowner turns 62 can certainly be done, but the homeowner will not be able to close on the loan until the day of their 62nd birthday or after. Therefore, homeowners may not want to start the process too early. Nevertheless, for homeowners who wish to get the ball rolling as soon as possible and have already researched reverse mortgages to determine that it is the best solution for their financial needs, starting the process shortly before they turn 62 can have its perks.
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Benefits of applying for a reverse mortgage before you turn 62:
Get Proceeds Sooner
Starting the process early can help you begin to receive your reverse mortgage proceeds sooner than you would if you wait until after you turn 62.
Possibly Save on Interest
If mortgage rates are low but are trending higher, starting the process sooner could potentially help you obtain a more affordable rate. If you wait and rates rise, you could miss out on lower interest rates.
Have Time to Explore Other Options
If you apply sooner, then you will learn about reverse mortgage loans and the entire process sooner. If it so happens that a reverse mortgage is not the ideal solution for you, you will have additional time to look into additional options.
Income Not a Factor
Since income and credit scores are not used as criteria to qualify, you can continue working without worrying about your income level placing you out of eligibility. Likewise, if you are not working, you won’t have to worry about retirement income, social security, unemployment or other sources of income affecting your eligibility.
Timeline of Reverse Mortgage Application
Here is an example timeline of the reverse mortgage process if you decide to apply before you turn 62:
Let’s say you are turning 62 in May of 2015 and you decided to start the reverse mortgage application process two months before your birthday.
March 2015: Get Counseling
A requirement of reverse mortgage financing is that the borrower must receive counseling from an HECM Counseling Agent. You can speak to your lender about finding a counselor or browse the directory on the U.S. Department of Housing and Urban Development’s website. (https://entp.hud.gov/idapp/html/hecm_agency_search.cfm)
April 2015: Apply With Your Lender
After counseling is complete, you can move forward with completing a mortgage application. Be sure to consult with a licensed reverse mortgage professional to make sure that your loan is schedule to after your 62nd birthday.
April/May 2015: Lender Processes Loan
After your application has been submitted, your lender can then order the title and appraisal and process the loan in advance of you turning 62.
May/June 2015: Close on Loan
Because you have already gotten most of the initial legwork out of the way, your lender will likely be able to order the underwriting on or about your birthday. You can then close on the loan shortly after.
Please keep in mind that this timeline is used purely as an example for educational purposes. Every borrower’s situation will be different and some loans may take longer to process. Talk to an experienced reverse mortgage professional for more information about what to expect.