Reverse Mortgages and Credit Scores
March 10th, 2008
- Bankruptcy and reverse mortgages
- Get a reverse loan or file for bankruptcy?
- Can Reverse Credit Scoring Reduce Foreclosures?
- More People Over 55 Are Filing for Bankruptcy
- Senior Issues: Obama & Pensions
If you’re considering a reverse mortgages should you worry about your credit score.
Let’s take a look at a topic that is often confusing: The dreaded credit score.
I remember when my parents sold their home in Baltimore a few years ago, my father was astounded at the process the new owners had to go through to obtain a mortgage. He thought it was crazy.
He said, “when I bought this house, I went to the bank, filed out one piece of paper, shook hands with the manager and that was that.”
Well things have changed since then and credit, especially today, is one of the biggest factors in getting a mortgage. Unless of course, you are talking about a reverse mortgage. There are no credit score criteria for these loans. Since there are no payments due from the borrower, and the home is the collateral for the loan, the credit history of the borrower(s) is not a concern.
In fact, even a bankruptcy will not necessarily prohibit a senior from obtaining a reverse mortgage. In the case of a Chapter 7 bankruptcy, if it has been discharged, it may be possible to take a reverse mortgage under certain conditions. In addition, I have had cases where the borrower was in a Chapter 13 bankruptcy and was able to get reverse financing.
Be certain to speak with your reverse mortgage consultant (it is extremely important to work with someone with several years’ experience in the field) about all the circumstances surrounding the bankruptcy. Do you know a senior who is behind on their mortgage payments? That is certainly a situation that will affect a credit rating. It can make sense to suggest a reverse mortgage to that person, to see if they can get rid of that mortgage payment…
Contributor Sue Haviland — based in Baltimore, MD — has been a reverse mortgage specialist for more than five years.