Does the amount of loan from a reverse mortgage depend upon the equity in the home?

Can I get a loan based on age and the value of my house even if I do not have a lot of equity?Does the amount of loan from a reverse mortgage depend upon the equity in the home?
The maximum amount that you can get from a reverse mortgage is a function of the amount of equity in your property, your age, and the location.





HUD has a page with a wealth of information on the FHA insured reverse mortgage (aka HECM):


http://www.hud.gov/offices/hsg/sfh/hecm/鈥?/a>Does the amount of loan from a reverse mortgage depend upon the equity in the home?
Yes, a reverse mortgage depends on the equity you have in your home but it also depends on other factors such as the borrower's age and whether a line of credit, lump-sum loan or monthly withdrawals are chosen. A reverse mortgage requires that you pay off existing loans on your home so that the lender has a 'first' mortgage.





Typical borrowers are elderly people who have lived in their homes for years, own them outright or have small balances on their loans. Lenders allow these elders to tap into the equity on their home by not using the standard loan qualification guidelines such as income, debt-to-income ratios, etc. Instead of the usual scenario where you pay down your mortgage over time and the equity increases, the reverse mortgage increases over time and your equity is reduced (unless the value of the home increases).





If you don't have any equity in your home Reverse Mortgage lenders will not be able to help despite your age or the value of your home. You can get a free informational meeting with a qualified representative though by calling your local HUD office.





These loans are very expensive - especially during the early years. They should be looked upon as a last resort instead of the first option. If you need additional income - cannot afford your home, you might look into selling the home and purchasing something less expensive or renting an apartment.
You may get an idea from


http://homeloans.atspace.com
The maximum FHA based loan is a limit set based on the median prices in your county.





Whether it can work for you depends on your age first. Older you are, lower the life expectancy, so the less equity you need. Getting one at 62 compared to 72 would have a big impact on the equity you would need.





They really do require a fair amount of equity for most people though, unless you're quite old. And I don't think they'd ever exceed 80% of the value of your home, at least not as a starting point.
The amount of your reverse mortgage is based on three factors - age of the youngest borrower (you, and any co-borrowers, must be at least 62 years old to qualify for this loan), maximum claim amount (i.e. the appraised value of your home) and the expected average interest rate.





It is also stated that you must either own your home free and clear, or have a relatively low remaining mortgage balance to qualify. Now, ';relatively low'; is pretty subjective. In my experience, a lender will qualify you for the loan so long as your principal limit exceeds the balance remaining on your mortgage (and any other liens that might be on the home).





In short, if your remaining mortgage balance exceeds your net principle limit - you probably don't qualify for a reverse mortgage UNLESS you are able to pay the difference out of your own pocket.
the connection between the property value to the loan amount is obvious.


to learn more about the relationship between the valeu and the amount you have to read more