The borrower must be at least 62 years of age to qualify for a reverse mortgage in the United States. There are no minimum income or credit requirements, but there are other requirements and homeowners should make sure that they qualify for the loan before they invest significant time or money into the process. For most reverse mortgages, the money can be used for any purpose; however, the borrower must pay off any existing mortgage(s) with the proceeds from the reverse mortgage and, if needed, additional personal funds. A pending bankruptcy that has not been finalized may, however, slow the process. Some types of dwellings, such as lower-value mobile homes, do not qualify. Before borrowing, applicants must seek free financial counseling from a source that is approved by the Department of Housing and Urban Development (HUD). The counseling is a safeguard for the borrower and his/her family, to make sure the borrower completely understands what a reverse mortgage is and how one is obtained.
The American Association of Retired Persons (AARP) has proposed a plan for keeping closing costs low for seniors who qualify for reverse mortgages.[citation needed] The plan must be approved by the federal government and is controversial for a number or reasons. One possible disadvantage is that homeowners will be limited to Bank of America, Countrywide, or Wells Fargo. Next Article: Reverse Bank Mortgage - Payments & Loan Advances