Age

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Reverse mortgage minimum ageThe minimum age to qualify for a HECM reverse mortgage is 62. If you’re married, one spouse can be younger than 62 and qualify as a non-borrowing spouse.

If you’re about to turn 62, you may be able to get the ball rolling on the reverse mortgage application process even though you’re not 62 yet. Lenders will typically allow you to start your application if you’re within 60 days of turning 62.

How age impacts HECM proceeds

The age of the youngest borrower or non-borrowing spouse plays an important role in determining how much you can get from a HECM reverse mortgage. The lender uses your age and the expected interest rate (EIR) to determine the applicable principal limit factor (PL factor). The PL factor is then multiplied by the maximum claim amount (equal to the appraised value for most people) to determine the principal limit, or PL. The principal limit is the initial proceeds available through the reverse mortgage that can be used to pay off mortgages, other debts, or allocated to term or tenure income, lump sum, and line of credit.

In short, age plays a very important role in determine how much you qualify for. Older borrowers tend to qualify for larger principal limits than younger borrowers.

To see how this works, let’s take a look at an example. Let’s assume we’re comparing two borrowers, a 65-year old and an 85-year old, and both have free and clear homes worth $250,000. Using our basic PL calculator, we get the following principal limits (using the PL tables in effect as of June 2019):

  • 65-year old: $107,500
  • 85-year old: $147,750

As you can see, the 85-year old qualifies for about $40,000 more than the 65-year old in this scenario. Again, older borrowers tend to qualify for more money than younger borrowers.

Now, does this mean you should wait to get a reverse mortgage so you can qualify at a higher age and get more money? Definitely not! The best candidates are those who don’t need the money right now. If you owe little to nothing on your home, you may want to consider setting up a reverse mortgage line of credit. There are some unique features built into the line of credit that may get you far more money than if you wait to qualify at an older age.

How lenders verify your age

Age is an important part of qualifying and calculating proceeds, so lenders will require you to document your age. Lenders will request that each borrower provide one of the following documents:

  • State-issued driver’s license or ID card (cannot be expired)
  • Birth certificate
  • Passport (cannot be expired)
  • Letter from the Social Security Administration
  • Form N-550 or N-570 Certificate of United States Naturalization
Expert Tip

If a reverse mortgage is beneficial today, it usually doesn’t make sense to put off getting one for the sake of qualifying at a higher age. A difference of a year or two typically doesn’t impact proceeds a whole lot.

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