DOES MY CREDIT SCORE MATTER WHEN I GET A REVERSE MORTGAGE?
Since the dawn of (reverse mortgage) time, reverse mortgage companies have always checked folks’ credit.
While previously we were just looking to find bankruptcies and judgments, since 2015 its gotten a little bit trickier.
Here’s a quick, under 2 minute video on whether your credit score matters when getting a reverse mortgage. If you can’t see if or if you’d just prefer to read, follow below where I’ll give you a full description.
Welcome back. Now if you watched the above video, you are now a reverse mortgage credit score expert!
If you didn’t watch it(or prefer just to read)…here’s the information you’re looking for.
BUT FIRST, IF YOU NEED IMMEDIATE HELP, YOU CAN ALWAYS CALL US DIRECT AT (267) 289 1095 OR EMAIL jasone@reversemortgagereality.com
First, we can help folks with credit scores in the 400’s and we can help folks with credit in the 800’s. As an example, today I took an application from a wonderful lady who’s middle credit score is 808.
MY MAIN POINT IS THAT CREDIT SCORE DOES NOT MATTER. AT ALL.
What DOES MATTER is credit characteristics.
First, if you’re on time on your mortgage and bills the reverse mortgage process will be very simple and straightforward. You’re financially responsible and we don’t need to vet you any harder than normal.
When we see someone who is habitually late on their bills, we may structure the reverse mortgage a little bit different than what you see on the TV commercials. By the way, “habitually late” means either you’ve been late on your mortgage, bills or property taxes more than once or twice.
BY THE WAY, IF YOU’VE BEEN LATE DUE TO UNFORESEEN CIRCUMSTANCES, YOU’LL BE OK.
I recently helped a wonderful widow who had been current on her mortgage her entire life, until 9 months ago. Then, Rosie missed her mortgage and credit card payments for 3 months. Naturally, being on fixed income, crawling out of that hole is darn near impossible. She needed help, and she needed it yesterday.
When we looked into her situation, she told me that she had a heart attack and was in a medically induced coma for 3 weeks. Then when she came to, she was so overwhelmed by her situation that it took her over a month to stabilize. She had no husband or close family to help. When she finally was released from the hospital she realized the awful situation that she was in.
Here’s the point to this story. Even though she was behind on her bills, it was due to her heart attack and hospitalization. She was not(and never had been) financially irresponsible. We were able to prove that this was an unforeseen circumstance by providing medical bills, and our underwriters cleared the reverse mortgage to go forward.
By the way, now Rosie is loving life. She’s living comfortably and most importantly, she’s healthy again😍
BUT WHAT IF ROSIE JUST MISSED HER MORTGAGE PAYMENTS WITHOUT AN EXCUSE?
We can still help the “Rosie’s” out there, but the process is slightly different. The best way to explain this is through an example.
I’m currently helping an 89 year old gentleman who is unfortunately in foreclosure. His son took a mortgage against dad’s home and refused to pay it…thus the real danger of losing his home.
If you’d like to know my personal thoughts on this…we’ll just leave it at “some people are UNBELIEVABLE😠”
Anyway, because dad is in a foreclosure and thus has been late on his mortgage, we aren’t just paying off his mortgage off. Our reverse mortgage is also setting up an escrow account(called a Lifetime Expectancy Set Aside or LESA) to pay his property taxes and homeowners insurance for the rest of dad’s life.
By the way, to read EXACTLY how this works, read the article here. Just so you know, the article talks about foreclosure, but the same “mechanism” is followed any time there is a Lifetime Expectancy Set Aside.
SO THE BOTTOM LINE FOR DAD IS THAT HIS HOME WILL BE SAVED AND HE’LL NEVER HAVE TO PAY TAXES OR INSURANCE AGAIN. NOR WILL HE EVER WORRY ABOUT LOSING HIS HOME.
Dad is through the roof and his family members couldn’t be happier😁
Now lets summarize what we just learned.
First, in a reverse mortgage, credit score in itself DOES NOT MATTER.
Next, credit characteristics DO MATTER.
If there’s been a late or two in the past…NO BIG DEAL.
HOWEVER, if there’s been a patter of lateness, we’ll require a lifetime expectancy set aside or LESA. This is just a fancy way of saying that we’ll pay your property taxes and homeowners insurance for the rest of your life.
This is the reason why we check folks’ credit. We need to make sure they can afford their bills. Even with a reverse mortgage, property charges get expensive. There are some people who are so far behind that getting a reverse mortgage won’t even help them. Then they need to downsize.
Furthermore, we check seniors’ income as well. Any income source is ok, whether its social security, a pension or full/part time employment. In fact, we can also look at assets(which are 401k’s, investment accounts, savings accounts etc) and qualify them as “potential” income. The vocabulary term for this is “dissipation”.
All we need to do is ensure that you have enough money coming in to pay for your property taxes, homeowners insurance(and other homeowners charges) and expenses on your credit report. We’ll also make sure you’ve got enough for your senior living expenses like groceries, utilities and health insurance.
Again, we just want to make sure that you will truly be able to thrive in your home when you have a reverse mortgage.
With that said, the vast majority of seniors can be helped by reverse mortgages…as long as they want to stay in their home for the rest of their lives AND as long as they can afford it.
I HOPE THIS ANSWERED YOUR QUESTION. IF YOU HAVE MORE QUESTIONS, OR IF YOU’D LIKE MORE INFORMATION, FEEL FREE TO CALL US AT (267) 289 1095 OR EMAIL jasone@reversemortgagereality.com.