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Financing Solutions for Mature Homeowners with Credit, Debt to Income or Cash Flow Challenges

 

Mature homeowners are confronted with many roadblocks when it comes to refinancing their homes or purchasing a smaller one.  Traditional loans have a debt to income requirement of 38%.   Your debt includes existing minimum payments on credit card and loan payments, as well as the mortgage payment you’d have if you get the loan, including taxes, insurance, and any mortgage insurance premium.  For example, if your total retirement income is $4,000.00 the max your monthly debts and new mortgage can be is  $2,480.00.   In today’s housing market this is not much to purchase a new home  or refinance your existing home.  Fannie Mae backed loans also require a minimum credit score of 620 and FHA requires 580.  If you have had a chapter 7 bankruptcy or a short sale your waiting period could be up to 4 years.  You may also need as much as 20% down in order to purchase a home after one of these circumstances.  Many retired citizens may think their only option may be to rent a home or apartment for the rest of their lives.  Fortunately, there is a comfortable alternative for those faced with the difficulty of wanting to refinance or purchase a smaller home given any of these situations.

 

To solve this dilemma for many seasoned citizens, on February 5, 1988, President Ronald Reagan signed the FHA Reverse Mortgage bill into law.  The requirements for this FHA product are incredibly easy and can provide the welcome relief many are seeking.  At least one of the homeowners must be 62 (a married spouse can be under 62 and is guaranteed to live in home rest of life as long as taxes and home insurance are paid and the home is the primary residence).  The home must be your primary residence.  You can start the Reverse Mortgage the day after a short sale closes, or after a bankruptcy is discharged.  There is no minimum credit score.  There are no income requirements or debt to income ratio requirements.  You must only have enough equity to qualify for a refinance or enough money to put down to purchase a home with a Reverse Mortgage.

 

This US government program has the option to choose a Fixed rate term that is set for both homeowners lifetimes, as well as an adjustable rate options.  There are NO monthly payments required for both homeowners’ lifetimes.  You are protected whether the housing market increases or drops.  The Reverse Mortgage can pay you a Guaranteed monthly payout for life, or a lump sum payment, or you may elect to leave your qualification amount in a Guaranteed Reverse Mortgage Line of Credit; which can be accessed whenever you would like.  When the market crashed in 2008 traditional Line of Credits were frozen and/or taken away from homeowners causing many fixed income borrowers to lose their homes due to the financial stress.  A Reverse Mortgage is different, the Line of Credit is Guaranteed never to be frozen or taken away.  In fact, the Line of Credit balance grows as you leave money there.  As with all HECM reverse mortgage products you have to maintain your home in proper repair, pay any taxes or homeowners association dues and live in the home as your primary residence.  This program has been a welcome relief to the hundreds of thousands of homeowners that have taken advantage of this safe program to tap into the equity in their homes.  Find out what this US Government insured program will do for you HERE.

 

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