Is a reverse mortgage possible? (home loan, credit, requirements, financial)

[trmaoy]

The person applying for the reverse mortgage doesn't currently own the home but the owner will put him on the deed. He and his family has been renting the home and living in it for some time, and he is older than 62. After he gets put on the deed, can he get a reverse mortgage? How long would he have to wait? Could he still get the reverse mortgage if the current owner stays on the deed too?

Also, is it true that any current mortgage on the property would have to be paid off with the proceeds of the reverse mortgage, or does the current mortgage have to be paid off before applying for the reverse mortgage?

Finally, how can you figure out how much you would receive from the reverse mortgage. Is there a formula that explains it? Thanks.

[VictorBurek]

I am not a reverse mortgage expert, but here is a link to a website, where you input age, value of home and zip code and it will let you know how much money can be pulled out using a reverse mortgage. The older the person, the higher amount of money can be pulled out. AARP Webplace | Reverse Mortgages | Loan Calculator

If there is a current mortgage on the property, it would have to be paid off. The first question can be better answered by someone more familiar with reverse mortgages then me. I would guess that you couldnt do what you are asking.

What is the purpose of trying this?

[brokerdave]

A Reverse Mortgage is a home loan available to individuals aged 62 or older as a payout of home equity to the borrower. Reverse mortgage borrowers can receive a lump sum, monthly payments or hold the money in a savings account as a credit line.

In a normal "forward" mortgage you access your home’s equity through a loan and make monthly payments to a lender, but with a Reverse Mortgage you receive payments from the lender in return for a decrease in your home’s equity. Reverse Mortgages can help homeowners who are "house-rich" but "cash-poor" stay in their homes, remain independent and meet their financial obligations.

Some benefits of a Reverse Mortgage are:

• No monthly payment
• No income or credit requirements
• Funds can be used to supplement monthly income

Reverse Mortgage loans do not have to be repaid until the death of the primary borrower(s), the home is sold or you permanently move out of the home.

Reverse Mortgages are backed by the Federal Housing Administration (http://portal.hud.gov/portal/page?_pageid=73,1827528&_dad=portal&_schema=PORTAL - broken link) (FHA) and are generally available up to 60% of your appraised value, depending on your age. Counseling prior to the loan is required and available through a multitude of sources including AARP.

Reverse Mortgages may be fixed or variable rates and can use up all or some of the equity in your home as the payout period progresses.

http://www.amerisave.com/reverse-mortgages (broken link)

[trmaoy]

Originally Posted by VictorBurek

I am not a reverse mortgage expert, but here is a link to a website, where you input age, value of home and zip code and it will let you know how much money can be pulled out using a reverse mortgage. The older the person, the higher amount of money can be pulled out. AARP Webplace | Reverse Mortgages | Loan Calculator

If there is a current mortgage on the property, it would have to be paid off. The first question can be better answered by someone more familiar with reverse mortgages then me. I would guess that you couldnt do what you are asking.

What is the purpose of trying this?

Thanks. Can anyone else shed some light on whether the person will be able to get a reverse mortgage after they are put on the deed?

[d4g4m]

Reverse mortgages were designed for seniors who are cash poor but asset rich. Meaning they have lived in the house a long time, have a lot of equity [low mort. or no mort balance] At age 62, you get the least amount. Any mortgage balance reduces the amount you can get. The closing costs and reserves are huge. The formula form some web sites use are very optimistic and hyped numbers. Don't be surprised when you apply by the much lower amount available to you.

[rainmand]

>>Can anyone else shed some light on whether the person will be able to get a reverse mortgage after they are put on the deed?

I used to be able to do that rountinely, but can't anymore. HUD doesn't have any restrictions, but all the Lenders now have restrictions because some bad apples have been flipping properties with Reverse Mortgages and lying about the values of the properties and the amount of work they've performed to the property. However, that doesn't mean it can't be done. In your instance it's a legitimate request that doesn't involve a flip, so draft a Letter of Explanation, explaining the scenario, and have your Reverse Mortgage Loan Officer provide it to all his Lenders for review. Your Loan Officer will provide it to their Account Executives who in turn will provide it to their Underwrtiers, and the Underwriter will say "yes" or "no". If they say "yes", they'll tell the Account Executive it's "conditional", meaning you, the homeowner, will need to provide additional supporting documentation. But at least you'll know of a Lender that'll do it for you - it'll just take a little more effort then a standard Reverse Mortgage.