What if I don't have enough equity to qualify for a reverse mortgage?

2012-03-02T16:04:00.000-08:00

There are three requirements that a borrower must meet in order to qualify for a reverse mortgage. These are that the youngest borrower is 62 years old, who has the ability to pay the taxes, and has approximately 35-40% equity in their house (depending on age). What if a borrower is over 62 years old, has the ability to pay taxes, but does not have enough equity to qualify? In that case, if the borrower has the means, they can make a contribution from their money for the difference between what they qualify for and what they need. If the borrower does not have the money, I will let you in on a secret known by very few: that you can request your current mortgage holder accept less than what is owed in order for you to qualify.

For instance, if you are 62 years old and currently own a house with a fair market value of $400,000, you would qualify for a reverse mortgage loan of approximately $240,000. If you owed more than that on your current mortgage(s), you can ask the mortgage holder to take an amount less than $240,000. There are specific rules and most banks are not familiar with how to handle these. Do not try this on your home as it has to be approached a certain way- and you only have one shot at getting the bank to give you the equity you need to qualify for a reverse mortgage.

In one extreme case, we were able to obtain a payoff from a lender that was owed more than $160,000 for approximately $35,000 because there were serious tax arrears and problems with the condition of the house. Everyone thought that it was not possible- the reverse mortgage counselor didn't understand it, the underwriter at the bank was skeptical, and the customer was absolutely dumbfounded. And did I say- pleased!

If you have property that doesn't qualify for a reverse mortgage because there is not enough equity, or you don't qualify because there are judgments or liens on the property, or if you have excessive tax arrears, I can help. I will try to negotiate a short payoff on your behalf and provide you with a reverse mortgage that will forever change your life. A life without a mortgage payment.

In a reverse mortgage, you will still be responsible for taxes and insurance, or if a condo or coop apartment, your maintenance or dues. And the property must pass an FHA inspection, certifying that the condition meets certain minimum standards.

Any questions about reverse mortgages or short payoffs, please call James Quail at 631 -806-5221.

What is the difference between a regular mortgage and a Reverse mortgage?

2012-02-26T13:01:00.000-08:00

The amount that you borrow from the bank costs you interest, and you have to pay taxes and homeowner's insurance to keep the property secure. The difference is that instead of paying back the money you borrowed to the bank with interest, that amount is added to the amount you owe against the home. So instead of paying monthly payments of principal interest, it comes from the existing equity in your home. That is the reason that you need a certain amount of equity in your home to qualify for a reverse mortgage, and the reason that amount differs depending on your age.

2012-02-26T12:09:00.001-08:00

As a senior reverse mortgage loan officer, part of my job is to educate people about misconceptions and key advantages of reverse mortgages. As I struggle to correct the misconception that a reverse mortgage is the same thing as deeding the property to the bank, I endeavor to educate the everyday consumer as I answer questions that I encounter.

As a background, a reverse mortgage is not that different from an everyday forward mortgage.

Reverse Mortgage Blog- Ask Quail

What if I don't have enough equity to qualify for a reverse mortgage?

What is the difference between a regular mortgage and a Reverse mortgage?