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I took out an equity line of credit 9 months ago, can I still get reverse mortgage?

By Catherine on 12.04.2018

Hello Catherine,

HUD has requirements for money a borrower may take on the reverse mortgage in the first 12 months of the loan.  The limit borrowers to 60% of their Principal Limit unless they are paying off existing financing that has been in existence for more than 12 months or was used for purchase or to pay off another loan and the borrower took no cash out at the time. Based on that, if the amount needed to pay off all loans on the house including your equity line equals 60% of your available Principal Limit or less, then yes, you can take out a reverse mortgage now. 

If your equity line was used to pay off an existing line and you took now cash from the line for your pocket, then again, yes you can take out a reverse mortgage now and even if you need more than 60% of your available Principal Limit.  If you opened the equity line but did not use it or have funds to pay it off and do not need to use the reverse mortgage to pay that line off, then yes, you can still get the loan.

However, if you are over the 60% threshold established by HUD, you need the reverse mortgage funds to pay the line off and the equity line was not used solely to pay off an existing loan on the house, then you have to wait another 3 months before you can apply for the reverse mortgage as that loan would have to have 12 months seasoning.  It gets complicated under the new program guidelines issued under HUD’s Final Rule, so I would encourage you to let us review your circumstances and let you know for sure how you would be considered. 

Visit our online calculator and you can see how much money you can expect from the program and that will also give you a chance to review your options.  If you would like, we would be happy to also discuss the seasoning requirements with you based on your circumstances.

 

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