It's that time of year again when we all spend a little bit too much in the knowledge that we can chip into our equity again after Christmas and get another little debt consolidation loan. Except this year it's different. This year sees a change to things as we've known them for the last decade or so. In the U.S. the sub-prime lending fiasco has caused quakes around the world in various financial markets as greedy brokers try to cut their losses by selling on other people's debts in massive bundles. And in the U.K. the build-up of personal debt has only made this worse, as we deal with the sub-prime virus and also the prospect - real, this time - of property values falling.
Our own household budgets are microcosms of national budgets, and we must not be as greedy as those men in red braces or as misguided as the politicians who have allowed this to happen thus far. Clear sight is necessary now, as we can no longer look on the Christmas debt consolidation loan as the saviour of our woes. We have never known personal debt like this, and the statistics tell us that it just can't go on like this.
There are alternatives to another Christmas debt consolidation loan that people will be turning to now, and they are healthy alternatives. These are properly constituted debt consolidation programs, and they take two broad forms. One is a simple debt management program and the other is called an Individual Voluntary Arrangement (IVA) or Protected Trust Deed in Scotland.
The best thing about an IVA is that the main action occurs right at the very start of the arrangement. An insolvency practitioner (or IP) will have a look at your income and expenditure and work out just how much you can afford to pay your creditors each month after your essential bills have been paid. Then your IP will negotiate with all your creditors collectively; this is the clever bit.
Your debt will be cut massively, typically by 60 percent but by as much as 70 percent, according to the terms of IVA legislation. As long as your creditors collectively agree to this - and there are certain stipulations to be met, such as being in employment and having at least three different creditors - you will have the bulk of your debt simply wiped out.
You will then have five years (three in Scotland) to pay off your remaining debt every month at a rate that you can afford. During this time your creditors are not allowed to contact you by any means; if they do you can sue them. Stopping those phone calls and letters, and the threat of a knock at the door by the bailiff, will suddenly be gone forever. This is surely a more sensible alternative to a debt consolidation loan, pushed by the target-driven salesmen who don't actually care what happens to you after they've received their commission. By comparison, a loan is as short-term as a sticking plaster compared to an IVA.
There are occasions when a debt consolidation loan is genuinely useful. This is if the loan repayments are smaller than the total of the repayments of the loans and credit card debts, etc., that it is replacing (which is usually the case) and if you can genuinely afford the repayments over the long term. Remember that this will usually be a secured loan and that you may lose your home if you do not keep up the repayments.
But for most people on a fixed income the IVA is the proper solution. Now, what about a Christmas IVA instead!
84523
Friday, March 14, 2008
Home Buyers Face Decisions that Affect Their Long-Term Financial Picture
First and foremost, you must have a mortgage consultant in your corner that is willing to take the time to know what your long-term goals are. Communication is the key factor here.
Curious prospective home buyers sometimes turn to Internet-based services just to see what current interest rates are. But a faceless web site will not take the prospect's future financial planning into consideration or guide the potential borrower through the many nuances of the loan process. When shopping for a home loan, be wary of web-based services that offer programs to reel prospects in with attractive rates that are based upon unrealistic time frames.
If a lender is offering a terrific rate based on a 10-day lock-in period, it is unlikely that the potential home owner would actually be able to find their dream home, get through the negotiation process and win approval from a lender within such a short period of time. This is called short-pricing, and when it comes time to close the transaction, the rate that was originally offered is simply no longer available. As a result, the unfortunate prospect is bulldozed into a loan program with a higher interest rate.
It is highly unlikely that a qualified loan originator whose business is based upon referrals will use unscrupulous tactics such as this to get new customers in the door!
Once you have found a mortgage consultant that you feel comfortable working with, lay your goals out on the table because it will have a tremendous impact on choosing a loan program that meets your specific needs. One of the most important factors to consider is how long you wish to borrow the money for. For example, if you know you will only be in the home for five years, it wouldn't make sense to opt for a 30-year loan program or pay points up front to secure a lower interest rate. You would not be in the home long enough to benefit from such action.
Your mortgage consultant should be able to narrow down a selection of programs based on the information that you have provided, and present you with an easy-to-read spreadsheet that clearly defines viable options for your interest rate and amortization schedule, monthly payment and any potential savings you may realize by paying points up front.
Moreover, a reputable loan originator will not hesitate to share this information with your tax consultant or financial planner so they may offer additional feedback on your behalf.
Home ownership imparts a rewarding vehicle for building wealth and a strong financial future. The mortgage consultant that you choose should be there not only when your loan closes, but should also provide you with ongoing service to assist you in managing that debt over time.
84471
Curious prospective home buyers sometimes turn to Internet-based services just to see what current interest rates are. But a faceless web site will not take the prospect's future financial planning into consideration or guide the potential borrower through the many nuances of the loan process. When shopping for a home loan, be wary of web-based services that offer programs to reel prospects in with attractive rates that are based upon unrealistic time frames.
If a lender is offering a terrific rate based on a 10-day lock-in period, it is unlikely that the potential home owner would actually be able to find their dream home, get through the negotiation process and win approval from a lender within such a short period of time. This is called short-pricing, and when it comes time to close the transaction, the rate that was originally offered is simply no longer available. As a result, the unfortunate prospect is bulldozed into a loan program with a higher interest rate.
It is highly unlikely that a qualified loan originator whose business is based upon referrals will use unscrupulous tactics such as this to get new customers in the door!
Once you have found a mortgage consultant that you feel comfortable working with, lay your goals out on the table because it will have a tremendous impact on choosing a loan program that meets your specific needs. One of the most important factors to consider is how long you wish to borrow the money for. For example, if you know you will only be in the home for five years, it wouldn't make sense to opt for a 30-year loan program or pay points up front to secure a lower interest rate. You would not be in the home long enough to benefit from such action.
Your mortgage consultant should be able to narrow down a selection of programs based on the information that you have provided, and present you with an easy-to-read spreadsheet that clearly defines viable options for your interest rate and amortization schedule, monthly payment and any potential savings you may realize by paying points up front.
Moreover, a reputable loan originator will not hesitate to share this information with your tax consultant or financial planner so they may offer additional feedback on your behalf.
Home ownership imparts a rewarding vehicle for building wealth and a strong financial future. The mortgage consultant that you choose should be there not only when your loan closes, but should also provide you with ongoing service to assist you in managing that debt over time.
84471
"Non-Recourse" a Reverse Mortgage Cunsumer Protection
One of the things that we always explain to senior borrowers when they ask about reverse mortgages is that they are non-recourse loans. The next question is always, What is a non-recourse loan?. This is a very important feature of the reverse mortgage and I want to take a moment to explain just what non-recourse means and how that affects senior borrowers who get reverse mortgages.
Simply put, a non-recourse loan means that the lender has only your property as security for their loan they have no other way to obtain repayment of the principal and interest in the event something happens and your home is not worth enough to pay off the obligation including all interest and fees. Could this ever happen? The loan itself is designed utilizing actuarial tables and knowing when most borrowers will vacate their homes due to passing or other reasons. Some borrowers absolutely blow these tables out of the water living active productive lives many years beyond the average life expectancy. Also, while most properties appreciate and stay ahead in value of their loan balances, it is feasible that during times of extended downturns in values growing balances due to money borrowed, accrued interest and charges and longer than expected loans due to prolonged lives, etc. the balance of the reverse mortgage loan could grow to be greater than the value of the property.
While the interest rates are low, many don't think about it but if the rates were ever to increase sharply on the adjustable rate reverse mortgages, then equity would be eroded much more quickly as well (a good example of this is to check the difference between the HUD Home Equity Conversion Mortgage HECM or Heck-um and a propriety jumbo reverse mortgage with an interest rate nearly 4% higher and see how much more quickly the balance rises on the higher rate mortgage). This is where the non-recourse nature of the loan is so important, regardless of what you owe when the loan becomes due as a result of your moving out of the home or passing, you or your heirs can never owe more than your home is worth.
This means that you can live in your home for life, never make another mortgage payment, and never have to worry about passing an obligation on to an heir. In most scenarios, you still pass equity on to your heirs but it's nice to know that regardless of how much money you receive on your reverse mortgage, how long you live in your property, what the interest rates do, or what values do in the future, you or your heirs can never owe more money than the property is worth. That non-recourse feature is one of the kinds of security the reverse mortgage is known for.
84393
Simply put, a non-recourse loan means that the lender has only your property as security for their loan they have no other way to obtain repayment of the principal and interest in the event something happens and your home is not worth enough to pay off the obligation including all interest and fees. Could this ever happen? The loan itself is designed utilizing actuarial tables and knowing when most borrowers will vacate their homes due to passing or other reasons. Some borrowers absolutely blow these tables out of the water living active productive lives many years beyond the average life expectancy. Also, while most properties appreciate and stay ahead in value of their loan balances, it is feasible that during times of extended downturns in values growing balances due to money borrowed, accrued interest and charges and longer than expected loans due to prolonged lives, etc. the balance of the reverse mortgage loan could grow to be greater than the value of the property.
While the interest rates are low, many don't think about it but if the rates were ever to increase sharply on the adjustable rate reverse mortgages, then equity would be eroded much more quickly as well (a good example of this is to check the difference between the HUD Home Equity Conversion Mortgage HECM or Heck-um and a propriety jumbo reverse mortgage with an interest rate nearly 4% higher and see how much more quickly the balance rises on the higher rate mortgage). This is where the non-recourse nature of the loan is so important, regardless of what you owe when the loan becomes due as a result of your moving out of the home or passing, you or your heirs can never owe more than your home is worth.
This means that you can live in your home for life, never make another mortgage payment, and never have to worry about passing an obligation on to an heir. In most scenarios, you still pass equity on to your heirs but it's nice to know that regardless of how much money you receive on your reverse mortgage, how long you live in your property, what the interest rates do, or what values do in the future, you or your heirs can never owe more money than the property is worth. That non-recourse feature is one of the kinds of security the reverse mortgage is known for.
84393
Stop Foreclosure with a Reverse Mortgage
Reverse Mortgages are not short term, hard money, bridge or balloon loans normally associated with the type of loans people are forced to get to stop a foreclosure proceeding. But for seniors aged 62 and over, a reverse mortgage can be a life-line that rescues the seniors in danger of losing their homes to foreclosure. Many seniors are faced with rising living costs with which their fixed incomes do not keep pace.
Rising costs of everything from food and gasoline to new medical expenses and even the rising costs associated with some of the adjustable rate mortgage programs that some seniors found themselves taking (either by too little explanation on the part of the originator or because they felt they had no other choice to keep their payments as low as possible), leaves many seniors with impossible decisions to make. Do they make the mortgage payment, or purchase the food and medicine they need to live for that month? These decisions have placed many seniors in peril as they near or enter foreclosure on their homes.
Now for the good news! A reverse mortgage requires no income or credit qualification. What this means is that if you are behind in your payments, even if the lender has filed a notice of default, you may still get a new reverse mortgage loan and once you get it, you will never make another payment for life. You still have to meet the other reverse mortgage criteria, but if you do a reverse mortgage may be just the right thing for you or your loved ones to live payment free and worry free for life.
So what are the criteria to get a reverse mortgage? The youngest borrower has to be aged 62 or older for the HUD government-insured mortgage. Some programs even go down lower, but they also lend much less in relationship to the overall value of your home. Your property must meet minimum requirements as set forth by HUD and must be an acceptable property type. Single family residences, townhomes, modular homes on permanent foundations, condominiums are all generally acceptable but there may be additional requirements if you have anything other than a single family detached home so be sure to let your reverse mortgage lender know what type of property you have and if you are subject to a homeowner's association, if your zoning is not residential or if your property contains excess acreage. Your property has to be in reasonably wel maintained condition with no major repairs needed (some repairs can have funds set-aside to be completed).
The only real credit requirement is that borrowers cannot be in default on a federal obligation or a federally insured loan. This means that if you are in default on an SBA loan, an FHA insured mortgage or other federal obligation, you would not be eligible for a reverse mortgage. Therefore, if the current mortgage that is delinquent is an FHA loan but has not had a notice of default filed yet, you can still get a reverse mortgage. Once the notice of default has been filed, the borrower would need to be able to bring in funds to cure the default before the reverse mortgage could proceed. Those funds could come from a family member, etc. Once the reverse mortgage was completed and funded, the borrower would never have to make another mortgage payment for life!
The borrower(s) must go through counseling, the loan has to be processed including property appraisal, all title issues including trusts, conservatorships, etc must be reviewed and approved so a reverse mortgage loan is not a 4 or 5 day loan. You need to realize that if you are going to use a reverse mortgage to stop a foreclosure it's a long term solution that must be dealt with in a timely manner without a lot of extra time for delay. Contact a reverse mortgage specialist today if you or a loved one find yourselves in this situation to see if a reverse mortgage is the right solution for you.
84383
Rising costs of everything from food and gasoline to new medical expenses and even the rising costs associated with some of the adjustable rate mortgage programs that some seniors found themselves taking (either by too little explanation on the part of the originator or because they felt they had no other choice to keep their payments as low as possible), leaves many seniors with impossible decisions to make. Do they make the mortgage payment, or purchase the food and medicine they need to live for that month? These decisions have placed many seniors in peril as they near or enter foreclosure on their homes.
Now for the good news! A reverse mortgage requires no income or credit qualification. What this means is that if you are behind in your payments, even if the lender has filed a notice of default, you may still get a new reverse mortgage loan and once you get it, you will never make another payment for life. You still have to meet the other reverse mortgage criteria, but if you do a reverse mortgage may be just the right thing for you or your loved ones to live payment free and worry free for life.
So what are the criteria to get a reverse mortgage? The youngest borrower has to be aged 62 or older for the HUD government-insured mortgage. Some programs even go down lower, but they also lend much less in relationship to the overall value of your home. Your property must meet minimum requirements as set forth by HUD and must be an acceptable property type. Single family residences, townhomes, modular homes on permanent foundations, condominiums are all generally acceptable but there may be additional requirements if you have anything other than a single family detached home so be sure to let your reverse mortgage lender know what type of property you have and if you are subject to a homeowner's association, if your zoning is not residential or if your property contains excess acreage. Your property has to be in reasonably wel maintained condition with no major repairs needed (some repairs can have funds set-aside to be completed).
The only real credit requirement is that borrowers cannot be in default on a federal obligation or a federally insured loan. This means that if you are in default on an SBA loan, an FHA insured mortgage or other federal obligation, you would not be eligible for a reverse mortgage. Therefore, if the current mortgage that is delinquent is an FHA loan but has not had a notice of default filed yet, you can still get a reverse mortgage. Once the notice of default has been filed, the borrower would need to be able to bring in funds to cure the default before the reverse mortgage could proceed. Those funds could come from a family member, etc. Once the reverse mortgage was completed and funded, the borrower would never have to make another mortgage payment for life!
The borrower(s) must go through counseling, the loan has to be processed including property appraisal, all title issues including trusts, conservatorships, etc must be reviewed and approved so a reverse mortgage loan is not a 4 or 5 day loan. You need to realize that if you are going to use a reverse mortgage to stop a foreclosure it's a long term solution that must be dealt with in a timely manner without a lot of extra time for delay. Contact a reverse mortgage specialist today if you or a loved one find yourselves in this situation to see if a reverse mortgage is the right solution for you.
84383
Thursday, March 13, 2008
Brits 'Look To Jump On January Sale Holiday Bandwagon'
The millions of Britons who are looking to book a foreign break this month may find that their dream holiday turns into a nightmare, new research shows.
According to a study carried out by esure Travel Insurance, more than 15 million people, including those who may have funded their purchase through a loan, are set to buy a holiday as they take advantage of the January sales. However, the firm pointed out that many of these consumers may discover that their "perfect holiday could be blighted" due to failure to carry out adequate research. Only 48 per cent of tourists check weather forecasts for any severe warnings before booking their holiday, while just 47 per cent go on the foreign office's website to see if there is any news they should be aware of before entering their country of choice. In addition, just over a quarter (27 per cent) fail to make sure if they need any vaccinations or medication before entering the country. A similar number (26 per cent) will not look into whether or not they will need a visa.
Findings from the company also indicated that 87 per cent of holidaymakers do not know what time of year the monsoon season hits certain parts of Asia. Meanwhile, 79 per cent of those surveyed are unaware when hurricanes are likely to strike the United States. The firm also pointed out that for the 34 per cent of Britons who are to purchase a holiday over the course of January, a fifth of these will not take out any travel insurance.
In not getting insurance, it is possible that consumers may well find that they face pressure on their finances should they have to meet the cost of medical treatment or replacing lost luggage themselves. This could see people develop difficulties in meeting demands on their spending upon their return home such as personal loans, credit cards, household bills and overdrafts.
Commenting on the figures, Jacky Brown, head of travel insurance at esure, said: "Most people love to jump on the bandwagon of the January sales season. A holiday deal may look great from the outset, but come holiday time, you could be caught out by flying out to your destination, such as Mexico, during the hurricane season. Delays and even flight cancellations in such extreme weather are inevitable therefore it's vital to make sure you have travel insurance to make sure you're covered.
"It's also important to remember that the government's European Health Insurance Card form like the E111 is not an insurance policy. It provides emergency medical care only, which in some destinations may be very limited."
After doing a sufficient amount of research, those looking for a competitive way in which to fund the holiday of their dreams may wish to consider taking out a low-cost personal loan. Earlier research by CreditExpert revealed that more than a quarter (27 per cent) of holidaymakers have used a personal loan, credit card or other form of borrowing to fund a trip. However, managing director Jim Hodgkins advised those who do use credit to make sure that they can keep up with repayments upon their return home as otherwise the damage to their borrowing history this would incur may cut off their access to cheap loans in the future.
84220
According to a study carried out by esure Travel Insurance, more than 15 million people, including those who may have funded their purchase through a loan, are set to buy a holiday as they take advantage of the January sales. However, the firm pointed out that many of these consumers may discover that their "perfect holiday could be blighted" due to failure to carry out adequate research. Only 48 per cent of tourists check weather forecasts for any severe warnings before booking their holiday, while just 47 per cent go on the foreign office's website to see if there is any news they should be aware of before entering their country of choice. In addition, just over a quarter (27 per cent) fail to make sure if they need any vaccinations or medication before entering the country. A similar number (26 per cent) will not look into whether or not they will need a visa.
Findings from the company also indicated that 87 per cent of holidaymakers do not know what time of year the monsoon season hits certain parts of Asia. Meanwhile, 79 per cent of those surveyed are unaware when hurricanes are likely to strike the United States. The firm also pointed out that for the 34 per cent of Britons who are to purchase a holiday over the course of January, a fifth of these will not take out any travel insurance.
In not getting insurance, it is possible that consumers may well find that they face pressure on their finances should they have to meet the cost of medical treatment or replacing lost luggage themselves. This could see people develop difficulties in meeting demands on their spending upon their return home such as personal loans, credit cards, household bills and overdrafts.
Commenting on the figures, Jacky Brown, head of travel insurance at esure, said: "Most people love to jump on the bandwagon of the January sales season. A holiday deal may look great from the outset, but come holiday time, you could be caught out by flying out to your destination, such as Mexico, during the hurricane season. Delays and even flight cancellations in such extreme weather are inevitable therefore it's vital to make sure you have travel insurance to make sure you're covered.
"It's also important to remember that the government's European Health Insurance Card form like the E111 is not an insurance policy. It provides emergency medical care only, which in some destinations may be very limited."
After doing a sufficient amount of research, those looking for a competitive way in which to fund the holiday of their dreams may wish to consider taking out a low-cost personal loan. Earlier research by CreditExpert revealed that more than a quarter (27 per cent) of holidaymakers have used a personal loan, credit card or other form of borrowing to fund a trip. However, managing director Jim Hodgkins advised those who do use credit to make sure that they can keep up with repayments upon their return home as otherwise the damage to their borrowing history this would incur may cut off their access to cheap loans in the future.
84220
Wednesday, March 12, 2008
How About a Just in Case Line of Credit
Isn't it a delight that potential problems are preceded by potential solutions?. Somehow modern financial thought is likewise. There are many financial challenges that one faces, but luckily there are solutions to that problem.
Borrowing too much can be a common example. That is where bankruptcy proceedings can be the way out. Not a pretty way out, but a way out nonetheless. Then again there might be need to temporarily spend more money than you have. Lines of credit, credit cards, personal loans, and payday loans might be the solution.
Sure there is more than one way to go, but I found a rather interesting opportunity. For older people, who have built up a home in their lifetime, but now need money for their daily or special expenses, where would they turn to? Luckily eastern philosophy or not, there seems to be a solution nonetheless. One alternative to consider is that of a reverse mortgage.
The striking feature of this is that there is no need to repay this mortgage. Could that actually be right? Well kind of. If senior citizens have built up equity in their homes, they can actually, borrow a lump sum or a stream of money against that equity. Unlike regular mortgages, they do not have to make periodic payments. This is because the requirement to repay the borrowing is triggered by specific situations.
One case that will certainly trigger a repayment call is if the home is sold. In most such cases, the reverse mortgager would have first right to the money, or second in case the original mortgage was still running. Another common event is the demise of the old person who borrowed the money. In this case too the lender takes possession of the property and disposes it off.
Finally, if the retirees move, then too they have to repay the borrowing. This could be because, she or he probably moves into an old age home or something similar.
It is not so much the amazing financial engineering that I marvel in a reverse mortgage. More than that I am happy with its use as a tool for peace of mind. This peace of mind is driven by the fact that there are no periodic payments to take care of.
Common sense dictates that there have to be rules and regulations governing this kind of arrangement. In many territories, there is a minimum age set for an issuer to write such an arrangement. In some other territories, there is a provision that allows a borrower to actually avail of sequential multiple borrowings of this nature, assuming that the equity or value of the underlying property is escalating.
Despite the fact that this introductory article probably explained the basic idea to you, there is a lot more to learn about it before you can get a grasp of how to compute the mortgage rate. Factors considered include, the overall interest rates prevalent in the economy. The equity built into the property. The market value of the asset. The age of the borrower. Mode of funding - lump sum vs. line of credit. This is just the beginning.
84037
Borrowing too much can be a common example. That is where bankruptcy proceedings can be the way out. Not a pretty way out, but a way out nonetheless. Then again there might be need to temporarily spend more money than you have. Lines of credit, credit cards, personal loans, and payday loans might be the solution.
Sure there is more than one way to go, but I found a rather interesting opportunity. For older people, who have built up a home in their lifetime, but now need money for their daily or special expenses, where would they turn to? Luckily eastern philosophy or not, there seems to be a solution nonetheless. One alternative to consider is that of a reverse mortgage.
The striking feature of this is that there is no need to repay this mortgage. Could that actually be right? Well kind of. If senior citizens have built up equity in their homes, they can actually, borrow a lump sum or a stream of money against that equity. Unlike regular mortgages, they do not have to make periodic payments. This is because the requirement to repay the borrowing is triggered by specific situations.
One case that will certainly trigger a repayment call is if the home is sold. In most such cases, the reverse mortgager would have first right to the money, or second in case the original mortgage was still running. Another common event is the demise of the old person who borrowed the money. In this case too the lender takes possession of the property and disposes it off.
Finally, if the retirees move, then too they have to repay the borrowing. This could be because, she or he probably moves into an old age home or something similar.
It is not so much the amazing financial engineering that I marvel in a reverse mortgage. More than that I am happy with its use as a tool for peace of mind. This peace of mind is driven by the fact that there are no periodic payments to take care of.
Common sense dictates that there have to be rules and regulations governing this kind of arrangement. In many territories, there is a minimum age set for an issuer to write such an arrangement. In some other territories, there is a provision that allows a borrower to actually avail of sequential multiple borrowings of this nature, assuming that the equity or value of the underlying property is escalating.
Despite the fact that this introductory article probably explained the basic idea to you, there is a lot more to learn about it before you can get a grasp of how to compute the mortgage rate. Factors considered include, the overall interest rates prevalent in the economy. The equity built into the property. The market value of the asset. The age of the borrower. Mode of funding - lump sum vs. line of credit. This is just the beginning.
84037
What Does the Lender need to Know on a Reverse Mortgage?
You've made the decision to get a reverse mortgage and you've heard that there is no income or credit qualifying so you think you will have no issues getting your loan. All you have to do is get your counseling, sign all the paperwork and you're set, right? Not exactly. There are some things you need to know about the programs that could keep you from qualifying, or your property from qualifying and sometimes these items are overlooked by loan officers and prequalification systems.
Firstly, there are no minimum credit score requirements, but you can't currently be going through bankruptcy proceedings and if you are still paying on a bankruptcy repayment schedule, then you may be required to have a minimum number of months paid in a timely manner. If you are on a schedule, then you need to let your lender know. The reverse mortgage programs I have worked with will not allow you to be delinquent on a federal obligation. If you have co-signed for a family member who has delinquent government-insured student loans, that could keep your reverse mortgage from being approved. Foreclosures do not mean an automatic denial under most reverse mortgage programs, provided that the property has not already gone to sale.
The next thing that escapes many prequalification systems is your property type. Condominiums are acceptable, but the project has to meet certain criteria. For instance, if you are applying for the government HECM loan, the lender checks an approval list and if your project is on it, no problem. If it is not there, they can apply for a spot approval for your loan. If the project has been rejected, your project is not eligible for the government program and chances are whatever made it ineligible for that program may also render it ineligible for other programs.
The project typically cannot be mainly rentals, they must be 51% or more of the units occupied by the unit owners. Manufactured homes built after June 15, 1976 are acceptable for the government HECM program provided they are on a permanent foundation, are taxed as real property and the Manufacturer would have had to obtained HUD tags when the home was built and those tags still have to be available for the appraiser to view at the time of appraisal. Single family residences in commercial or agricultural zoned areas, properties with excess acreage, or unique properties could also render a property ineligible for a reverse mortgage.
With senior borrowers, many times you have title issues to keep in mind as well. Trusts, conservatorships, powers of attorney, all are fine as long as they are done so that they meet reverse mortgage requirements. If you have any of these instruments, let your reverse mortgage originator know right away so that he or she can have them reviewed for acceptance. Also, when you have lived in your property for 20-50 years, there are any number of things that can come up on the title that may need to be resolved. If you are aware of any title issues (liens from lawsuits, back taxes, work that needed to be done), again, let your originator know as soon as possible so that those issues can be resolved before they delay your loan. Better to find out about all potential issues before costs are incurred or a lot of time is spent.
84012
Firstly, there are no minimum credit score requirements, but you can't currently be going through bankruptcy proceedings and if you are still paying on a bankruptcy repayment schedule, then you may be required to have a minimum number of months paid in a timely manner. If you are on a schedule, then you need to let your lender know. The reverse mortgage programs I have worked with will not allow you to be delinquent on a federal obligation. If you have co-signed for a family member who has delinquent government-insured student loans, that could keep your reverse mortgage from being approved. Foreclosures do not mean an automatic denial under most reverse mortgage programs, provided that the property has not already gone to sale.
The next thing that escapes many prequalification systems is your property type. Condominiums are acceptable, but the project has to meet certain criteria. For instance, if you are applying for the government HECM loan, the lender checks an approval list and if your project is on it, no problem. If it is not there, they can apply for a spot approval for your loan. If the project has been rejected, your project is not eligible for the government program and chances are whatever made it ineligible for that program may also render it ineligible for other programs.
The project typically cannot be mainly rentals, they must be 51% or more of the units occupied by the unit owners. Manufactured homes built after June 15, 1976 are acceptable for the government HECM program provided they are on a permanent foundation, are taxed as real property and the Manufacturer would have had to obtained HUD tags when the home was built and those tags still have to be available for the appraiser to view at the time of appraisal. Single family residences in commercial or agricultural zoned areas, properties with excess acreage, or unique properties could also render a property ineligible for a reverse mortgage.
With senior borrowers, many times you have title issues to keep in mind as well. Trusts, conservatorships, powers of attorney, all are fine as long as they are done so that they meet reverse mortgage requirements. If you have any of these instruments, let your reverse mortgage originator know right away so that he or she can have them reviewed for acceptance. Also, when you have lived in your property for 20-50 years, there are any number of things that can come up on the title that may need to be resolved. If you are aware of any title issues (liens from lawsuits, back taxes, work that needed to be done), again, let your originator know as soon as possible so that those issues can be resolved before they delay your loan. Better to find out about all potential issues before costs are incurred or a lot of time is spent.
84012
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