A most interesting thing happened to me this last week. I got a phone call from a “forward” lender friend of mine.
You know, the guys who provide the traditional, ‘make a payment every month’ loans to clients who need financing for the purchase or refinance of their homes.
My friend was working with a senior citizen who was retired. The client wanted to refinance his home to eliminate a high-interest loan and to obtain some cash to complete some needed repairs on his home. It was quickly apparent that the client did not have sufficient cash flow to obtain the financing he wanted.
Many loan officers would have dismissed the client. Because my friend focuses on the journey and not the conclusion, he thought of me.
The qualifications for a Reverse Mortgage are very different from a traditional forward loan.
A Reverse Mortgage has three basic qualifications:
- The client must be at least 62 years old.
- The home must be the principal residence.
- The homeowner must have at least 50% equity in the home.
Those who provide financing with traditional loans are primarily concerned with the probability that the homeowner will pay back the balance of the mortgage. Usually, the lender looks to monthly cash flow calculations to provide some satisfaction that the client has the where-with-all to pay back the loan. The results can be a dis-qualifier.
Now take another look at the Reverse Mortgage qualifications listed above.
The qualifications for a Reverse Mortgage make no mention of cash flow as a qualifier.
Although, about three years ago FHA requirements were revised. Now, Reverse Mortgage lenders must make an analysis of the homeowners’ credit. The purpose is not to qualify the loan, but to determine if the homeowner:
- Is inclined to pay their property taxes, insurance, HOA dues and maintenance, and
- Has the financial capacity to pay those costs for the duration.
If it is determined that the homeowner may not comply with the above, the Reverse Mortgage lender sets aside funds that would have been proceeded to the homeowner, and the lender makes the required payments. Should this occur, obviously, available proceeds would be diminished to the homeowner, however a homeowner may still get a Reverse Mortgage.
Should you have a situation where dis-qualification for a forward loan eliminates the homeowner from getting financial relief, please contact me for a free consultation.
I MAY BE ABLE TO SAVE THE DEAL!
CALL ME FOR A FREE CONSULTATION TO DETERMINE IF A REVERSE MORTGAGE MAY BE OPTIMAL FOR YOUR FAMILY OR YOUR FRIENDS
(909) 273-5556/(760) 407-6740
HOME FINANCING, INC.