As a homeowner, you understand the importance of taking care of your property. From routine maintenance to costly repairs and upgrades, the expenses associated with homeownership can add up quickly. For retirees living on a fixed income, budgeting for these expenses can be a challenge. However, if you’re age 62 or older, a reverse mortgage could provide a solution.
A Reverse Mortgage, also known as a Home Equity Conversion Mortgage (HECM), is a type of loan that allows you to tap into the equity in your home to receive cash payments. These payments can be used for any expenses you may have, including home repairs and upgrades. However, to qualify for a Reverse Mortgage, you must meet specific occupancy requirements.
In this article, we’ll explore the occupancy requirements for Reverse Mortgages, from the application process to annual certification.
Before the Loan: Meeting Occupancy Requirements
When applying for a Reverse Mortgage, you must occupy the home as your primary residence. While traditional forward mortgages require occupancy for only one year, Reverse Mortgages require you to live in the property as your primary residence for the lifetime of the loan. To verify occupancy, the lender will review various documents such as property tax records, voter registration, and utility bills.
During the Loan: Maintaining Occupancy Requirements
Once you’ve obtained a Reverse Mortgage, you must continue to meet the occupancy requirements by living in the home as your primary residence. However, this does not mean you must be there 24/7/365. You are free to travel and come and go as you, please. As long as you don’t leave your home as your primary residence for more than 12 consecutive months, you’ll continue to meet the occupancy requirements.
Annual Occupancy Certification: Ensuring Compliance
To ensure compliance with the occupancy requirements, the US Department of Housing and Urban Development (HUD) requires borrowers to sign an annual occupancy certification. The certificate includes questions such as whether you have sold or conveyed the property title and whether you have been absent from the property for more than 12 consecutive months. The certification must be returned to the lender within 30 days of receipt.
Conclusion: Age in Place with a Reverse Mortgage
A Reverse Mortgage can be a valuable financial tool for retirees looking to age in place. By tapping into the equity in your home, you can receive cash payments to cover a range of expenses, from everyday bills to long-term care costs. However, to qualify for a Reverse Mortgage, you must meet the occupancy requirements, including living in the home as your primary residence. By complying with these requirements, you can enjoy the benefits of a Reverse Mortgage while staying in your home for as long as possible.