Qualifying for a traditional mortgage is nothing like qualifying for a reverse mortgage. To be approved for a traditional mortgage, your income, credit, assets, and the property offered as collateral must meet stringent requirements. A reverse mortgage loan approval is based on completely different criteria.
Traditional mortgage loan approvals exclude many senior homeowners
Seniors are often on a fixed income, and it may be less than it was during the height of the homeowners' income earning days. The income is often completely insufficient to make a large traditional mortgage payment.
Liquid assets (savings) in reserve are also a standard requirement for traditional mortgages. Seniors relying on traditional pensions and Social Security may not have amassed a large amount of savings they can use to obtain a mortgage approval.
Reverse mortgage loan approvals open doors for senior homeowners
Imagine a senior homeowner who needs to improve his cash flow. He owns his home free and clear (or has a small mortgage balance). Bank after bank has denied him a traditional mortgage. He finally comes in contact with a reverse mortgage lender and boom…he's approved, just like that.
Why is it so much easier for a senior homeowner to be approved for a reverse mortgage rather than a traditional mortgage? It's as easy as 1,2,3.
- Age: A reverse mortgage lender requires the youngest homeowner on the loan application to be at least 62 years old. This is a loan specifically for seniors. As a matter of fact, the older the applicants are, the more likely they are to be approved for the maximum reverse mortgage amount.
- Equity: While a traditional mortgage is used to purchase a home, the purpose of a reverse mortgage is to pay out equity to the senior homeowner. Therefore, the homeowner must have substantial equity. Equity, that portion of the home that is free of mortgage liens, is one of the 3 basic pillars of a reverse mortgage loan approval.
- Interest Rate: The economy can influence the cost of a reverse mortgage, as well as the amount of the loan approval. The 3rd factor that reverse mortgage lenders consider when deciding how much to lend is the interest rate. The higher the current market interest rate, the lower the loan amount approved. Today's mortgage rates are extremely low, and it is an excellent time for seniors to take advantage of this financing opportunity.
Unlike a traditional mortgage application, bad credit does not prevent approval for a reverse mortgage. A reverse mortgage loan approval does not require a minimum credit score or any particular type of credit history. However, no open bankruptcies are allowed. Other than an open bankruptcy, credit is not a consideration.
Get your reverse mortgage loan application started
You are a senior, you own your home, and you need cash. Applying for a reverse mortgage creates no obligation and takes very little time. It's easy to connect with a reverse mortgage lender in your area. Go through the initial consultation to see if a reverse mortgage might be right for you, and attend a reverse mortgage counseling session (required by law for most reverse mortgages). In about 30 days, you could have an income stream that will change the rest of your life.
You may have worked your whole life to buy that house. Now, let that house pay you back. Enjoy your golden years and make no monthly payments. If you need cash to make ends meet, you have every right to tap into your largest asset, your home.
Read more of the articles in this Best Reverse Mortgage Learning Center. You will find that the rewards and benefits of a reverse mortgage just keep getting better and better, the more you know about this unique mortgage loan product.