What Should You Do If You Have Been Disqualified For A Reverse Mortgage?

Nothing can guarantee that you will be financially stable and secure once you reach your senior years. You always have the option to save, or buy insurance. You can even invest or reallocate yearly. But despite all these strategies, you may still realize that medical bills, home repairs, and rising costs can create problems in what you believe as a foolproof financial plan. If this takes place, you may consider taking out a reverse mortgage.

But what if you don’t qualify for this type of loan? For a few borrowers, the answer is to reapply later. But for others, it may be that a reverse mortgage loan isn’t the right financial solution for their current circumstances. Fortunately, there are three alternatives that you may want to consider.

What is a reverse mortgage?

A reversemortgage Columbia is a kind of equity loan that is designed for borrowers who are at least 62 years old to provide them with a reliable source of income once they retire. Instead of making payments to a lender for the loan they’ve taken out, a reverse mortgage won’t require any until the time comes that the borrower no longer lives in the house.

Reversemortgage borrowers could access the money in a form of monthly payments from the reverse mortgage lender to their bank account. They could also get the money as a form of a lump sum or a line of credit. But this would depend on what the purpose the funds will serve. If the borrower dies or decides to sell the house, the reverse mortgage will be repaid through the value of the house.

Reverse mortgage provides a lot of benefits. In case you choose the monthly payment option, this specific income stream could help you maintain a comfortable lifestyle and make sure that you don’t have to sell your house. Senior homeowners have different needs and wants and if applicants would like to age in place, then this type of loan is a good alternative.

Factors That Could Disqualify You From A Reverse Mortgage

Just like with any type of loan, there are specific minimum requirements needed if you want to get approved for a reverse mortgage loan. If you don’t meet these guidelines then you will be disqualified.

Age

You need to be at least 62 years old if you want to be eligible for a reverse mortgage loan. You also have to note that the younger spouse’s age who is not applying for a loan could be the cause of your disqualification. Lenders want to make sure that the non-borrowing spouse is capable of sustaining themselves in the house over their lifetime, too.

Credit and Spending History

Although your credit score is not the only factor that would determine if you will qualify for a reverse mortgage loan, lenders will still take your current expenses and credit history into account.

If you want to be approved, lenders would like to see that you can fulfill your financial obligations. In some cases, that is with your current retirement savings. However, some people may not qualify for a reverse mortgage in case the loan itself will not offer sufficient cash to meet their expenses. Factors like property maintenance, food, and the costs of prescription drugs are going to be considered.

Your Property

There are instances when it is not the borrower that is disqualified. Sometimes, it is the property.

The property should be a single family home or a residential building with at least two units and is being occupied by a borrower. In some instances, condominium projects as well as manufactured houses might also qualify. Such properties also have to be in good condition. Although there’s no set amount of home equity needed to qualify, you still have to make sure that you’ve got at least 50% home equity. In case your current mortgage is very high, you may not be able to qualify for a reverse mortgage loan.

How To Requalify For A Reverse Mortgage

In many instances, a reverse mortgage disqualification isn’t permanent. You could still qualify in the future once your situation changes. Here are a few things you need to know.

What If I Was Disqualified Because of Bankruptcy?

In you case you are going through bankruptcy and you applied for a reverse mortgage, there is a possibility for you to be disqualified in case the procedures have not been finalized. When this happens, you can reapply once the bankruptcy has been discharged.

What If I Was Disqualified Because of Credit History?

In many instances, underwriters would take into account special situations and think about working around them. They could also reconsider you once you have improved your credit history. If you have improved your credit profile or perhaps explain your special situation, the reverse mortgage underwriters could reconsider approving your loan.

What If I Was Disqualified Because of Too Little Home Equity

You may be disqualified when the amount that you were approved to borrow in a reverse mortgage loan is not enough to pay off your current mortgage and sustain you. When this occurs, you could wait until you have made more principal payments on your existing mortgage and increased your home equity. If you want to speed this up, you should think about making larger payments.

Call Reverse Mortgage Specialist if you want to know how you can increase your chances in getting qualified for a reverse mortgage. 

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/