Why do reverse mortgages consider home value rather than equity amount?

LOL...because you can't determine the equity position without knowing what the value is.

In order to do a reverse mortgage, both valuation and liens must be considered.. Since the maximum loan amount is based on the loan to VALUE, not the loan to EQUITY.. The starting point is how much the home is worth.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

If you own a home and it is worth$200,000 and you owe $100,000 on it, you still own100% of the home, even though your equity position is only 50% of its worth. The reason the formula uses the value instead of the equity is because the current balance becomes the first draw against the available amount. If you own half of the home with someone else, YOU do not qualify for a reverse mortgage. A reverse mortgage is made to both owners on title. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

You could take your question another way versus the way the other professionals have already answered I guess....... If you own the property jointly with someone else... the reverse mortgage company wouldn't do a reverse mortgage only on the portion that you own. You would have to own the entire home in order to do the reverse mortgage. Then pending on value they determine your eligibility based on your age, life expectancy etc.. I guess if it wasn't explained or they didn't understand there was someone else on the deed, not 62 or older and not willing to be on a reverse mortgage then, they don't realize there's no loan...?? Not to repeat what was said but to try to help further clarify, I hope we've all helped.

Details make a big difference, do your research. All owners of a property have to agree to a mortgage and sign the mortgage which has to be against 100% of the property. 50% might as well be 10%.

Please feel free to call for all the reverse mortgage info you'll need. I'm local to you. I'm in Vandalia at Mortgage Resource Group. 937- 281-2017