Come April 27, the process for getting a reverse mortgage will be significantly different. And if prospective borrowers are interested in a reverse mortgage without a lot of hassles, then now’s the time to apply for the loan, a Washington Post article suggests.
This window of opportunity exists, of course, until the long-awaited Financial Assessment takes effect. Afterward, applying for a reverse mortgage will be more similar to applying for a “forward” mortgage, a process in which borrowers will need to demonstrate the capacity and willingness to meet their loan obligations.
But these additional requirements may hurt the borrower, rather than help, according to the Washington Post. Life expectancy set-asides, in particular, might “be so substantial they’ll be left with minimal cash at closing, making the entire reverse mortgage process a waste of effort.”
Additionally, the requirements could exclude “potentially thousands of senior homeowners from obtaining a reverse mortgage,” the article states.
Still, some reverse mortgage experts say the tougher rules are a good thing, because they will prevent financially weak borrowers from taking out loans they can’t handle.
“Bottom line: Tougher credit standards have come to reverse mortgages — finally,” the article states. “Before applying, be aware of the types of documentation you’ll need.”
To read the full Washington Post article, click here.
Written by Emily Study