What credit score do you need for a reverse mortgage?
What credit score do you need for a reverse mortgage?
Considering a reverse mortgage to access your home equity in retirement? You might be surprised to learn that a good credit score isn't the main hurdle. Unlike traditional mortgages, reverse mortgages focus on your home's value rather than your credit history.
Here's the key: with a reverse mortgage, you borrow against your home's equity, receiving funds instead of making monthly payments. So, lenders care more about the value of your home to ensure they recoup their investment.
Credit Check Still Happens
While a stellar credit score isn't required, lenders will still run a credit check. Why? It helps them assess your financial responsibility in a few ways:
- Calculating Residual Income: They might use your credit report to estimate your ongoing financial obligations to determine if you can afford property taxes, homeowners’ insurance, and essential living expenses.
- Checking for Delinquencies: Large outstanding debts or tax liens could signal difficulty managing the financial aspects of a reverse mortgage.
So, What Is Important?
Here's what will significantly impact your eligibility for a reverse mortgage:
- Age: You must be at least 62 years old.
- Home Equity: A significant portion of your home's value needs to be available as equity. The more equity, the greater the potential loan amount.
- FHA Counseling: Completing a government-approved counseling session is mandatory to understand the implications of a reverse mortgage.
The Bottom Line
Don't let credit score worries deter you from exploring a reverse mortgage; focus on your home's equity.
To learn more about reverse mortgages and to find out if one is right for you visit https://reganteam.com/reverse-mortgage/ or call 707-508-8473