Financial assessment will become an integral part of the requirements for reverse mortgages in the future, according to a NY Times report Friday. This follows a change in April that suspended the standard fixed Home Equity Conversion Mortgage (HECM). Both of these changes were made to ensure the long-term viability of the program. Homeowners 62 years and older can use the HECM reverse mortgage to access their home equity for retirement or other needs, or even purchase a home. The program is a priority for HUD and FHA and carries significant benefits for baby boomers wanting to include the equity in their home as part of their retirement plan. Financial assessment will require specific documentation that the homeowner is able to make future property tax, insurance, and HOA payments. Given these are basic requirements of any mortgage loan, the change should not have much impact. These will simply formalize the kind of considerations and due diligence a professional advisor would make before recommending a reverse mortgage.
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