Documentation You’ll Need for Your Reverse Mortgage Application
The Home Equity Conversion Mortgage (HECM) is a reverse mortgage. It is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you. Reverse mortgages are unlike a traditional home equity loan or second mortgage. HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.
Here is a list of the documentation you may need for your reverse mortgage application:
In order to qualify for a reverse mortgage, homeowners must be able to prove that they are 62 years or older. You will also be required to provide a copy of your social security or medicare card.
Verification of your principal address
Reverse mortgages can only be used on a house that serves as the homeowner’s principal residence. This means that they must live in the home for the majority of the year and have at least 50% equity in the home. Homeowners must be able to prove this by providing a driver’s license with the address of the home or other documentation.
Verification of income
The homeowner’s income may not have an impact on whether or not they will be approved for the reverse mortgage but the lender will want to verify that they have enough income to cover maintenance, homeowners insurance, property taxes, and any other fees. Homeowners must produce bank statements, W2s, etc.
In order for the homeowner to understand exactly what a reverse mortgage will mean for them, they are required to take part in counseling with a counselor approved by the U.S. Department of Housing and Urban Development (HUD). Counseling is available over the phone in some states. Homeowners must provide a certificate that they will receive after they have completed the counseling session.