Reverse Mortgages and Bad Credit

More Americans are dealing with bad credit. Thanks to the recession, about 43 million Americans have credit scores of 599 or lower, according to FICO. Having bad credit makes it unlikely you can qualify for a mortgage, auto loan, or other types of credit. If you have bad credit, you may be wondering if you can qualify for a reverse loan. Here’s why bad credit won’t keep you from getting approved for a reverse mortgage.

Reverse Mortgage Guidelines

Unlike a traditional mortgage, reverse loans don’t require credit and income checks. In fact, you can have bad credit and no job and still get approved for a reverse mortgage if you meet the right criteria. You don’t need an income because you don’t have to make monthly mortgage payments. Instead, a reverse loan pays you through a lump sum, regular payments, a line of credit, or a combination of methods. Once you receive the cash you can use it for any purpose, including paying off debt.

Reverse Mortgage Age

To apply for a reverse home mortgage you must be at least 62 years old. You receive a larger payout the older you get, so it could make sense to wait a few years before applying for a loan. The amount of money you receive also depends upon the amount of equity you have in your home. The reverse mortgage lender orders an appraisal to place a value on your property.

Having bad credit won’t keep you from getting a reverse mortgage. But before you cash out your home equity, make sure you have a solid plan in place. You want to make sure that getting money can help improve your financial situtation so you can begin to repair your credit.

This entry was posted on Wednesday, July 14th, 2010 at 12:26 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.