How Can a Senior Get a Reverse Mortgage Loan With Bad Credit?
Over the past half decade, the credit crunch has affected millions of prospective borrowers. The credit crunch has made getting a loan next to impossible for many people who have less than perfect credit. Luckily, many senior citizens can still get a mortgage loan even if they have bad credit.
Pay the Fees
One requirement a senior citizen with bad credit needs to meet in order to get a reverse mortgage loan is to pay the fees. Fees are commonly considered one of the biggest deterrents to getting a reverse mortgage, for all applicants regardless of credit score. The fees, which cost thousands of dollars, include mortgage insurance, title insurance, origination fees, underwriting fees, and real estate appraisal fees.
Get Proper Counseling
The second requirement a senior citizen with bad credit needs to meet in order to get a reverse mortgage loan is to get proper counseling. Since reverse mortgages are much more confusing than traditional mortgages, many experts warn seniors and attempt to sway them from getting one. Because of the risks associated with reverse mortgages, all potential borrowers are required to get HUD counseling. After successful completion of the counseling, the senior citizen will receive a certificate that is required for loan approval.
Have Plenty of Equity
The third requirement a senior citizen with bad credit needs to meet in order to get a reverse mortgage loan is to have plenty of equity in their home. To get a reverse mortgage, and depending on the age of the borrower, a reverse mortgage borrower with bad credit will need upwards of 50% equity in their home in order to be approved for a mortgage.
*Affects pricing. With the No Closing Cost
Option, borrowers finance the closing costs instead of paying for them at
closing. Borrowers who pay closing costs at closing may qualify for a lower
interest rate. Some upfront fees (ex. credit report and appraisal) may apply
and may be credited at closing.
*Refinancing or taking out a home equity loan or line of credit may increase
the total number of monthly payments and the total amount paid when compared to
your current situation.
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