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Eligibility criteria for a reverse mortgage

Eligibility criteria for a reverse mortgage

A reverse mortgage allows senior homeowners to monetize the equity in their homes. The money may be used to meet financial requirements post-retirement. Such a mortgage is available to people aged 62 years and above. A reverse mortgage provides tax-free cash with no monthly installments.

However, stringent guidelines and rules apply to reverse mortgage loans. The most common type of reverse mortgage is the Home Equity Conversion Mortgage (HECM) provided by the Department of Housing and Urban Development (HUD).

Eligibility criteria

To qualify for a HECM loan, here are the reverse mortgage eligibility criteria you need to meet:

  • You need to be at least 62 years old.
  • The home should be your primary residence, and you should be a resident of that property for a year or more.
  • You should own the home, or a low balance should be outstanding on your home mortgage; the balance should be paid off before closing the HECM reverse mortgage.
  • There should be no delinquency on the federal debt, such as income tax or student loans; however, the amount received from the reverse mortgage may be used to repay such loans.
  • Some portion of the reverse mortgage loan amount should be set aside to meet expenses, such as property taxes, maintenance and repair costs, and insurance. Alternatively, you need to have adequate money to meet these expenses.
  • The home should be in good condition, and you must willingly participate in counseling offered by HUD-approved agencies. The counselor will not only check your eligibility but will also help you understand the financial implications of the loan.

The loan amount depends on your age (or your spouse’s age, if you are a couple), the appraised value of the home, rate of interest, and the Federal Housing Agency’s (FHA) limit for HECM reverse mortgage. You may receive the money in different ways as listed below:

  • Line of credit wherein the money may be accessed with a written application.
  • Fixed monthly payouts for a predetermined period that does not change, even if the value of your home decreases.
  • Tenure payouts wherein the money received as a fixed monthly sum and are discontinued either on your demise or if you quit the home.
  • Modified term/line of credit is a hybrid payout wherein you receive a line of credit as well as a fixed monthly installment for a specific period.
  • Modified tenure/line of credit, where you get a line of credit and fixed monthly installments if that is your primary residence.

Important pointers

Reverse mortgage loans are available only for your primary residence, and vacation homes or investment properties do not qualify for such loans. Generally, lenders offer up to 80% of the value of your home within the maximum limit defined by the FHA.

This type of loan is recommended if you plan to live in the same house for a long time after your retirement and do not want to pass it to your children. It is also an excellent way to generate additional funds to meet post-retirement requirements when you have also built a portfolio of other investments.

Reverse mortgages are complex, and it is best to seek expert advice before making a decision.

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Top debt settlement companies in the USA

Incurring debt is really common in this age and era as everything has become extremely expensive, from college education to owing a house. If you ever feel that your debt is too large and you may not be able to pay it in time, then you can seek the help of a debt settlement company. These companies essentially communicate with your creditor to try and lower your debt and the rest of it is typically forgiven. Given below is a list of the top 9 debt settlement companies in the USA. National Debt ReliefIf you have USD 7,500 or more in debt, then the National Debt Relief can be a great choice for you. It is one of the most prominent debt settlement companies in the country. The initial consultation is offered for free, but you will have to pay 15-25% of the settled debt amount as a fee. Freedom Debt ReliefThis a dedicated company that offers debt relief services to people who have at minimum USD 7,500 to USD 10,000 in debt. 15-25% of the settle debt amount is charged as fee once a settlement is negotiated, and in return, they offer the possibility of settling the debt within 24-48 months. CreditAssociatesCreditAssociates surely is one of the top 10 debt settlement companies because of their satisfying services. They help customers who have USD 7,500 or more in debt and charge a portion of the settled debt. You can also use their services via mobile apps. Accredited Debt ReliefGenerally, people with a minimum debt of USD 10,000 use the services of companies such as this to lower the due amount; however, Accredited Debt Relief has no minimum amount stated on their website. They take two to four years to complete the process and the fee is charged only after that. CountryWide Debt ReliefThey recommend that customers with USD 10,000 or more in debt avail their services to get their debt resolved. They promise to lower the debt by 20% or charge nothing. Their track record shows a great success rate. United Debt CounselorsIf you are looking for the top 10 debt settlement companies, United Debt Counselors should be considered. This company offers its services through professional debt counselors to help you settle credit card or unsecured debts. Century Support ServicesCentury Support Services can help you reduce your debt effectively. The consultation is initially free and the fee is charged only after the first payment is given to the creditor. Subsequent fees are taken in a similar fashion.Elite Financial ServicesThe company offers to settle your unsecured loans in as short a duration as 12 to 36 months. They provide debt analysis for free and charge the debt settlement fee only after the process is completed. New Era Debt SolutionsNew Era Debt Solutions has been providing debt settlement services for over 20 years. On average, they have helped reduce around USD 250,000,000 for their clients can reduce your debt by 47% of the original amount. Now that you know the top 10 debt settlement companies in the USA, you can compare their fees and services to determine the best one for your needs.

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Top 5 high dividend ETFs for 2020

Now and then, it is recommended you revisit your portfolio and realign it with your financial goals (which may also have changed amidst the current global pandemic). A popular investment is exchange-traded funds (ETFs), which allow you to hold a basket of high dividend-paying companies. It is a hybrid of mutual funds and stocks. Here are five of the top high dividend ETF funds that you can consider for investment during 2020: Vanguard Total Stock Market ETF (VTI) The CRSP US Total Market Index is tracked by the VTF. It is representative of almost 100% of the investable market, comprising micro-cap, small, mid, and stocks. As of March 31, 2020, the SEC yield was estimated at 2.20%, and the expense ratio was 0.03%. Vanguard Dividend Appreciation ETF (VIG) This fund keeps track of the NASDAQ US Dividend Achievers Select Index, which was previously known as the Dividend Achievers Select Index and covered approximately 182 stocks. As of December 2019, the expense ratio was 0.06%, and the SEC yield for the fund was about 1.80%. Vanguard High Dividend Yield ETF (VYM) This particular fund from Vanguard monitors the FTSE High Dividend Yield Index. The fund represented about 404 stocks of companies with high dividend yields as of November 2019. The approximate expense ratio for every USD 1,000 is USD 6 (0.06%), while the SEC yield for VYM is estimated at 3.23% SPDR S&P Dividend ETF (SDY) This fund is amongst the few that have a five-star rating from Morningstar. It is one of the best high dividend ETF funds that covers a large selection of dividend-paying stocks and levies very reasonable fees. SDY keeps track of the S&P High Yield Dividend Aristocrats Index, comprising more than 100 high-dividend company stocks. The yield on SDY as of December 2019 was 2.5%, and the expense ratio was estimated at 0.35%. iShares Select Dividend ETF (DVY) This dividend ETF is offered by BlackRock and monitors, approximately 100 companies that have a five-year history of high dividend payouts. The ETF had a relatively high SEC yield of 3.56%, with an expense ratio of 0.39%. A word of advice on investments Exchange-traded funds work like mutual funds and allow you to procure exposure to the broader market, a particular industry, or other sub-segment as per your personal needs. The primary objective of ETFs is to invest funds in companies that have increased dividends payouts for a minimum number of years. Some companies may invest in funds that pay the highest dividends. Before you invest in high-dividend ETFs, you must check their historical performance and determine the returns delivered over the years. This information should be available online through a fund tracker or the funds’ websites. The dividend ETFs annual payout is also available on the website or the prospectus, which should help you determine the funds’ annualized yield. Alternatively, you may calculate the profit by dividing the latest dividend by its net asset value (NAV) of the fund’s share price.

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