topic Re: Reverse mortgage in Mortgage Loans

Reverse mortgage

IOBA — Sat, 19 Sep 2009 05:03:14 GMT

How does a reverse mortgage look on a credit report?

How does a reverse mortgage affect the credit score?

Re: Reverse mortgage

IOBA — Sat, 19 Sep 2009 21:03:50 GMT

Anyone have an idea? Dallas Home Guy?

Re: Reverse mortgage

BrianB_The_Loan_Professor — Sun, 20 Sep 2009 06:01:26 GMT

Shouldnt have any negative impact but not sure if it will boost the score at all?

Re: Reverse mortgage

IOBA — Sun, 20 Sep 2009 23:49:30 GMT

I wasn't sure if it even showed up on credit reports. Does it?

If it does, is it a debt?

My parents are considering it, but have no clue what it will do to their credit (help it or hurt it). At this point, they can not afford a negative hit.

Re: Reverse mortgage

Anonymous — Mon, 21 Sep 2009 01:46:06 GMT

A reverse morgtage (in most cases I have seen and I admit they are only a few) is more for people having some sort of finacial difficulty later in life and/or who did not plan for retirement well. My only point in bringing that up (and I am not saying there are not other reason that could come up), is that if someone is in need of a reverse mortgage to stay afloat, and has a decent enough FICO to get a reverse mortgage (I could be wrong but I assume you still have to qualify), FICO score should not be an overriding concern. If they have a bunch of equity and decent credit and just need more of a short term type help, maybe some sort o HELOC type thing that they can then pay off as they can.

Anyways, between the inquiry and the new credit line, they will likely see a small credit score drop. It should recover in 6 months or so.

Re: Reverse mortgage

ShanetheMortgageMan — Tue, 22 Sep 2009 02:26:26 GMT

It reports as a mortgage debt, and increases each month they get money. It's a negative amortizing mortgage, so each month they get money the principal, and the compound interest on the principal is added. It should affect scores just like any normal mortgage would, ding a few points at first then be higher 4-6 months later.

Re: Reverse mortgage

IOBA — Tue, 22 Sep 2009 16:38:11 GMT

Thanks Shane.

Would you send me a private email explaining how the whole reverse mortgage works. My older family members did a reverse mortgage. They understood that it cost them $5k. They rec'd a lump sum. Every yr they get some $ deposited in their acct.

When they die, kids pay off the mortgage when they sell the house.

Re: Reverse mortgage

ShanetheMortgageMan — Tue, 22 Sep 2009 18:05:53 GMT

With a reverse mortgage the mortgager has several options:

1. Term (where they get a set amount of payments each month, for a set amount of time, 20 years is a typical term)

2. Tenure (where they get a set amount of payments each month for the remainder of their life), this amount is less than the monthly amount in option 1

3. Credit line (where you can set aside an amount of money as a line of credit which the borrower can draw on at any point)

4. Upfront draw (a lump sum up front that they can receive at closing)

1 & 2 are mutually exclusive, but either can be mixed with 3 & 4, and 3 & 4 can be done together.

Just need the youngest borrowers birth date, zip code, home value and amount owed on the property to determine the options. No minimum scores, qualifying debt to income ratio, or reserves are needed. Just can't be in BK, however can be late on the mortgage and even in foreclosure (although can't be foreclosed on as obviously they wouldn't still own the home at that point).

Re: Reverse mortgage

virgoprincess823 — Tue, 22 Sep 2009 19:23:41 GMT

Chiming in as a Reverse Mortgage processor for over 2 years and processing for 6 years, reverse mortgages DO NOT report on you credit as there is no payment being made and is NOT score driven. Credit is only pulled to verify liens, other mortgages listed and or possible judgments. Shane is correct it is a negative ammortizing loan.

On another note, I just want to add...In regards to "why not just take out a HELOC when you have good FICO scores"? The question should be why would I ever put my elderly grandparent, aunt, mother, father into a 30 year mortgage making payments that they can't afford anymore, regardless of FICO.

I have helped a tremendous amount of people keep there homes who almost lost them due to foreclosure, I've helped seniors be able to now afford a comfortable living situation for themselves and not worry about how they're going to pay for their medicine, or groceries, etc. Some of them just want to take trips and buy a new cars, and fix up their homes with new decks and kitchens and bathrooms etc. It truly depends on one's situation, and whether or not they plan on leaving the home to their heirs. I see FICO's from low 400's to mid 800's everyday in my pipeline. But again, why make a 70 year old man start over with a 30 year mortgage or HELOC? When done correctly, taking out a reverse can be an altenative retirement plan, there is even a reverse purchase product.

My dad has a reverse mortgage, he COULD afford his mortgage payment, but he was retiring and his pension will allow him to live comfortably without a mortgage payment. It was a decision we made as a family, he's happy as pie! When he passes away, me being the executor of his estate will either have to refinance and pay off his debt, or sell his condo and keep the profit. Should he ever go upside down, we'll pay what we can and HUD will pay the rest, thats why there MIP.

Unfortunately, there's a negative stigma with reverse mortgages but people really just need better education on how the product works, and if it works for their family...just my 2 cents!

Message Edited by virgoprincess823 on 09-22-2009 03:23 PM

Re: Reverse mortgage

IOBA — Tue, 22 Sep 2009 22:02:51 GMT

I appreciate all the information.

I have one set of parents that did the reverse mortgage and are happy. I think they receive a few thousand dollars each year. I've heard them refer to it as a separate bank account, like a line of credit, that they can draw on, that they don't have to pay back. Honestly, I am not sure they, in their late 70's and 80's, understand it completely. They made their decision.

The other set of parents (in their mid 70's) are paying on their mortgage. They fell behind one payment and are struggling to get it, and the other fees paid. They do not qualify for refinancing or any of the other help out there because their income is too low. (They are three older people, ages between mid 70's and upper 90's with only social security as income.) When things were better for me, I had offered to buy their house and let them live in it, rent free. My mom said absolutely not. She'd rather do a reverse mortgage than have me buy their house!

I think they are upside down now on their home. If not upside down, darn close. (A VERY sarcastic - Thanks Wells Fargo, for preying on senior citizens! Giving them a mortgage that they had no hopes of ever qualifying for! Much less be able to afford!)

With no, or little equity in their home, would they even qualify for a reverse mortgage?

Re: Reverse mortgage

IOBA — Tue, 22 Sep 2009 22:06:24 GMT

PS - Credit wise, they have maxed out all of their major credit cards, close to maxed out their store credit cards, maxed out my cc (that I had loaned them just in case before I knew they were sinking financially). If they had to come up with a 5k closing fee, there is just no way!

They do not want to accept help in anyway.

The most they will accept is birthday money for a specific thing, like golf or getting a haircut. They will accept money for Thanksgiving dinner and Christmas dinner. And that they don't have a choice on cuz I put it directly into their bank account.

Re: Reverse mortgage

ShanetheMortgageMan — Tue, 22 Sep 2009 23:11:14 GMT

Equity is definitely a requirement, usually at least 30-40% equity is needed. I feel bad for the other set of parents, sad that someone who has worked their entire life to avoid the situation they are in shouldn't have to go through it. You said they don't qualify for a refinance, but have they approached their lender for a loan modification? As objective as lenders are, I can't see them not willing to help elderly people who potentially might lose their home.

Re: Reverse mortgage

virgoprincess823 — Wed, 23 Sep 2009 14:09:22 GMT

IOBA

I'm sorry to hear about your parents troubles. How a reverse works is the youngest borrower is given a portion of the value of their home. The more equity in the home, the more money they would qualify for.The older the borrower, the more they qualify for, it has to do with life expectancy.

EX:

Youngest Borrower 1 (you said mid 70's so I'm going with 75 yrs old)

Home Value : 100,000

Principal Limit (how much they can borrow based on age & value): 74,100

Net Available( if no liens, mortgages on property): appr. 62,000

Now the costs to do a reverse are high, I cannot tell you a lie. However the benefit depending on one's needs can be great!! Basically the bulk of the cost are the origination fee which is capped at $6000 but will never be less than $2500. It's 2% of the value of the home, up to 200K, anything over and above 200K it will be 1% added capped at $6000. On a 100K property 2% is only 2K, the fee will automatically be $2500. Also, a reverse mortgage is insured by HUD, and thats at 2% of the value of the home, no cap. The rest of the fees are appraisal, credit, counseling (mandatory), title charges, flood certificate, recording stamps, etc. The cost to do the loan should be the same no matter where your parents shop b/c the fees are regulated by HUD. You may find a broker that's willing to reduce the origination fee, or a title company that is willing to trim some fat, but thats about it. It is what it is. If you are interested in shopping for your parents I'd be glad to help. Send me a PM. And make sure that you look for a Fixed rate product, qualifies people for more money, the rate right now is 5.56. There are some adjustable rates out there that will allow for a line of credit to be set-up, whatever is not used will not have to be paid back. With the fixed, you have to take all the cash in one lump sum.

The thing of it is Wells Fargo does reverse mortgages, you would wonder why they wouldn't automatically try to help your parents by refinancing them into a reverse. I personally dislike Wells Fargo. My bank Wachovia was bought by them an I immediately closed my account. They are so rude to our seniors and really don't care about anything but the money. I wouldn't have my worst enemy go to Wells. One of my reverse clients almost lost her home to Wells. We asked for a "stay" on the foreclosure, just so we could finish the transaction and they said they would only agree to "stay" if they did the reverse themselves, otherwise they would continue to foreclose. Thing of it is, apparently they couldn't make the deal work for her, so she came to us, and we made it work.

Message Edited by virgoprincess823 on 09-23-2009 10:09 AM

Re: Reverse mortgage

IOBA — Wed, 23 Sep 2009 16:50:58 GMT

I agree Wells Fargo is not customer service orientated.

I had a mortgage with them and they screwed up applying the monthly payment every single month. They yelled and screamed at me that they were NOT a bank. They insisted I pay JUST the required amount and not a penny more. I fired them as my mortgage company. Lol - they would not let me open a bank account because they have no bank branches near my residence. Therefore, I could not do direct deposit into my Wells Fargo bank account (which was because they would not allow me to open a checking or a savings account), which meant I had to snail mail my payment in every month. Of course, everyone knows that takes at least 7-10 days, if not longer to reach it's destination! And they'd cash the check (it would clear MY bank) on the 25th, but not be credited to the mortgage account until the 5th. *rolling my eyes*

With my folks, when they wanted to refinance the house, WF said no. But you have a 7 yr old van, how about you take out a loan on that? Which they did. Which put them further behind. If they couldn't afford the current minimum payments, how is taking out a 2k loan on a van going to help? They traded one debt for another, which in the end, cost them more per month.

When they needed help again, WF said we can talk about the refi on the house, but you will be turned down. Then gov't help came along. They tried that and were turned down flat. The only thing WF has agreed to, which my parents wont' agree to, is to add the fees to the back end of the loan. Their monthly payment would go up or they would have a balloon payment. But either way, they will still always be reported at least 30 days late for another six months. (The time to do everything and get it processed.) They have like 27 or 28 yrs left on the loan.

WF is the same company that went to them -- actually called them up -- and said we noticed your house has gone up in value, interest rates are low, let's do a refi! My folks were struggling before, but at least they were making some headway.

There's not much I can do to help them. My budget is straining at the seams until more money starts to flow in. But at least I am on a cash basis right now. Saving up for surgery. Making payments on medical bills.

I realize, I will probably be in a similar boat soon. Retire then buy a house. While I am mad at WF for taking advantage of my parents, my parents could have said no. I know that I will be getting a mortgage that will last into my 70's....

Re: Reverse mortgage

virgoprincess823 — Wed, 23 Sep 2009 19:55:56 GMT

IOBA-

Keep in mind that a reverse may be an option for them.

Re: Reverse mortgage

IOBA — Thu, 24 Sep 2009 00:44:28 GMT

Thanks.

I called today and tried to have a heart to heart with mom.

They were turned down for a reverse mortgage. They are finally almost even on their loan and their home value. ALMOST.

Sounds like they are totally out of options.

Re: Reverse mortgage

Anonymous — Tue, 29 Oct 2013 19:42:19 GMT

Hello,

My question: Who are the best lenders for this product? Can anyone approximate the average cost now. Thanks

Re: Reverse mortgage

Lykasigh — Mon, 13 Oct 2025 23:54:28 GMT

Generally, a reverse mortgage shows as a mortgage account on your credit report, similar to a traditional loan which is secured by real estate. However, because you are not required to make monthly payments, the loan payment history will not impact your credit in the usual manner.

That said, you do need to remain current on your property interest, homeowners insurance, and other related obligations. Failure to remain current on these financial obligations will negatively impact your credit. The lender will also conduct a financial assessment prior to the loan being issued, which will review your credit history, debt obligations, and income to ensure you will be able to meet ongoing obligations to maintain the loan. Read more about the financial assessment process https://www.investopedia.com/terms/r/reverse-mortgage-financial-assessment.asp.

As a general guideline, reverse mortgage lenders are typically looking for an acceptable credit history, including making timely payments on the bills you owe and not having a large number of bankruptcies or foreclosures in the very recent past. More specifically regarding credit requirements.

In other words, a reverse mortgage will not harm your credit so long as you remain current on the obligations regarding hopefully the credit accounts related to the mortgaged property; therefore, failure to remain compliant with taxes or insurance payments will impact your credit.

Re: Reverse mortgage

Kh_Samyak — Mon, 13 Oct 2025 23:55:39 GMT

Hi everyone
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Thank you!