Minnesota homeowners must meet the following eligibility requirements to qualify for a reverse mortgage.

• Age: 62 years old or older
• Type of Residence: Principal residence
• Insurance Premiums: Homeowners and mortgage insurance premiums (MIP)
• Federal Debt: Current, cannot be delinquent on property taxes, income taxes, or federal student loans.
• Home Ownership: Own home or low mortgage balance

You must also meet FHA minimum property requirements. No additional income or credit requirements exist to qualify for a reverse mortgage borrower. It may be a good option for those with less-than-ideal credit but who possess a good amount of home equity.

Potential costs of a reverse mortgage for borrowers in Minnesota include the following.

• HECM Counseling Fee: The HUD sets no minimum fee. It varies by agency.
• Origination Fees: The HUD has a maximum reverse mortgage origination fee of $6,000.
• Closing Costs: The loan has different closing costs, which can include real estate taxes, property appraisals, title searches, surveys, and more.
• Mortgage Insurance Premium: The FHA requires a reverse mortgage to have a MIP. This is partially paid at closing and annually for the life of the loan.
• Interest Rate: Reverse mortgages can have a variable or fixed interest rate.

District Lending experts can help you understand your closing costs before processing the loan. We are transparent about the entire process, so there are no surprises when unlocking your home equity.

A reverse mortgage can be settled upon your death, so it can impact your heirs. Ultimately, the loan will be due when you no longer live in the property as your primary residence for whatever reason.

Your heirs will have 60 days to settle the loan, though they can get up to six months if they consult an attorney. They can repay the loan in the following ways:

• Home Equity: Existing home equity can settle the reverse mortgage.
• House Sale: Proceeds from the home sale can cover the reverse mortgage.
• Estate: Your estate or heirs can cover the loan. According to the Consumer Financial Protection Bureau, it must be the total balance or 95 percent of the home’s appraised value.

Any remaining equity will be turned over to the heirs of your estate in Minnesota.

You or your estate will need to repay the loan if you:

• Sell the home;
• No longer use it as your principal residence;
• Are no longer living;
• No longer meet the FHA minimum property requirements.

Once the bank requires full payment, the loan is repayable within 60 days, though you may work with an attorney or counselor to extend it for up to six months.

There are risks to taking out any type of loan in Minnesota, including reverse mortgages. You could lose your home if you no longer meet the requirements of the loan term. For example, if you no longer pay the property taxes or use it as your principal residence.

Additionally, the loan balance could exceed the house’s value over time. Consult with District Lending to understand your risks. We can help older homeowners in Minnesota mitigate them.