One of the most common misconceptions I hear, especially when it comes to reverse mortgages, is that you must own your home outright—with no mortgage at all—to qualify. While that sounds logical at first, it’s not actually true. Let’s clear this up.
The reality is, many homeowners still have a balance on their mortgage when they look into a reverse mortgage. The key is that the reverse mortgage proceeds must first be used to pay off any existing loan secured by the home. Once that’s done, the reverse mortgage can take the place of your old mortgage, and you’ll no longer have monthly principal and interest payments. Of course, you’ll still be responsible for property taxes, homeowners insurance, and maintaining the home, but eliminating the monthly mortgage payment is often one of the biggest reliefs for clients.
Think about it this way: if you have equity in your home—meaning your home is worth more than what you owe—you may qualify. The amount of equity required depends on your age, the value of your home, current interest rates, and the type of reverse mortgage you choose. For many, this is an opportunity to stay in their home, improve cash flow, and reduce financial stress without having to sell.
This same principle holds true for traditional refinancing options. You don’t need to wait until your mortgage is completely paid off to explore a new loan that may better fit your needs. In fact, waiting until your mortgage is gone might cause you to miss opportunities along the way.
The bottom line? You do not have to own your home free and clear to qualify for a reverse mortgage—or even for most forward mortgage products. What matters is that you have sufficient equity, the home is your primary residence, and you meet the program’s other eligibility requirements.
If you’ve been holding off because you thought you didn’t qualify, now’s a great time to find out what options may be available to you.
At OneTrust Home Loans, my goal is to help you understand your choices clearly so you can make the decision that best fits your financial goals. If you’d like to see what you might qualify for, reach out to me today—I’d be glad to walk through your situation with you.
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid. This is not tax advice. Consult a tax professional. These materials are not from HUD or FHA and were not approved by HUD or a government agency. This is an Advertisement. All products are not available in all states. All options are not available on all programs. All programs are subject to borrower and property qualifications. Rates, terms and conditions are subject to change without notice. For more information on Reverse Mortgages, visit: https://onetrusthomeloans.com/reversemortgage-disclosures/
