Under the new rules, older people who apply for a reverse mortgage will be subject to more intense financial scrutiny. Specifically, lenders will analyze applicants' income, expenses, assets and credit, something similar to what consumers do when they apply for a traditional mortgage loan. When large banks, such as Bank of America and Wells Fargo, offered reverse mortgages, borrowers were also denied for reasons x, y, z and could not continue with the process of obtaining a reverse mortgage. A reverse mortgage is a financial agreement in which a reverse mortgage company makes payments to a homeowner against the capital of your home.
If a sizeable reserve is required, this can consume all of your capital and wipe out most of the benefits you would get from applying for a reverse mortgage in the first place. However, obtaining a reverse mortgage isn't always a simple process, as homeowners must ensure that they meet the different requirements for approval. To learn more about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. While the financial requirements aren't as strict as those for traditional mortgages, not everyone is approved or eligible for a reverse mortgage.
Not all lenders are created equal and not all have the same obstacles to overcome, so the more in-depth knowledge a broker has about reverse mortgage and financial evaluation, the simpler the process will be. It's a challenge because there are many misconceptions about reverse mortgages that require a clear and credible explanation; the rewarding thing is that, once you can provide objective information and understanding, you've been able to help many older people enjoy life more fully in retirement. With a reverse mortgage, the money you borrow doesn't have to be returned unless you die or sell your home. A spouse who is a co-borrower or who is listed as an eligible non-borrowing spouse in a reverse mortgage can remain in the home without having to pay the mortgage after the primary borrower moves or dies.
If you've been denied a reverse mortgage, you may be able to take steps to fix the issues that interfered with approval. In that case, they will have much less knowledge about how to close a reverse mortgage with a borrower who has financial evaluation problems or they will not have enough lenders to compare the mortgage with. During the housing crash and subsequent recession, many reverse mortgage holders stopped paying their loans because they didn't pay their property taxes or insurance. Phil Stevenson is one of approximately 150 certified reverse mortgage (CRMP) professionals in the United States, and currently serves on the Ethics Committee of the National Association of Reverse Mortgage Lenders (NRMLA).).
In addition to your financial resources, your potential future income and credit history can also be considered as part of the reverse mortgage application process. Eligibility for a reverse mortgage may depend on the type of reverse mortgage you are interested in obtaining.
