The FHA has designed new guidelines and defined new eligibility for the reverse mortgage applicants. That is why all the reverse mortgage applicants will first have to undergo a financial assessment. The whole purpose of this financial assessment is to make sure that the applicant has enough credit apart from the loans to pay for the property taxes and interests along with bills. That is why the whole financial assessment has been divided into 2 parts:
- Residual income
- Satisfactory credit
The residual income of reverse mortgage applicantsThis amount should be sustained by the applicant apart from all the monthly expenses.
Satisfactory credit of reverse mortgage applicantsAll the basic house debts should have been paid by the homeowners around in a period of last 12 months and no more debt should be left to be paid.
The interest rates of reverse mortgageThe HECM offers the home owners with either adjustable or fixed property interest rates. For the fixed interest rate the HECM makes the borrower sure that property interest will stay same throughout the mortgage. However, in most cases the interest is always higher in the beginning of the reverse mortgage tenure and levels out in the upcoming years. On the other hand is the adjustable interest rate for the reverse mortgage. These interests rate tend to change both on the yearly or monthly basis throughout the whole tenure of the reverse mortgage.
The initial interest rate of reverse mortgageThis is the initial rate at which the interest rate grows on an annual basis considering the loan amount in the mind. This Initial interest rate stays the same for those reverse mortgages that are fixed rate. However in the case of the adjustable reverse mortgages the interest rate keeps on changing with on an annual or a monthly base.
The expected interest rate of reverse mortgageThis is basically the kind of interest that is used to calculate the value that the home owner deserves. The IIR is mostly different for the people of different age groups that want to opt for reverse mortgage.
The money amount that a senior citizen can receive.The principal amount is mostly the total amount of money that an individual opting for reverse mortgage can receive from the HECM. This money is mostly calculated based on the factors that re mentioned below:
- The maximum amount that is claimed by the house owner
- The actual age of the youngest reverse mortgage borrower
- The expected interest rate
- The PL clauses that are mentioned by the HUD.