Recently, I've had a couple of friends that have had to short sale their homes. In fact, one friend lost his home in foreclosure before the short sale was approved. All of them were over 61 years old, mostly retired and/or semi-retired with limited incomes and now really messed up credit. They were concerned over what's next...where do they live....who will want to rent to them considering their credit was severely impacted. Normal underwriting rules states they cannot obtain a mortgage for 3-4 years....it looked like rentals were their only options. Not true. They all had money available in savings, IRA, 401K and/or funds from relatives. They were able to purchase a lower cost home and obtain a mortgage regardless of their credit and without any mortgage payments. How? A reverse mortgage purchase. They put down 50% and we funded the remaining 50% via a reverse mortgage. No mortgage payments for the rest of their lives as long as they live in that property, quick closing....the only real consideration is the appraisal. No income, assets or credit to verify or needed to qualify. They were even more convinced when they realized the reverse mortgage is guaranteed via USA's HUD/FHA program. Next time you have a short sale customer that's 62 or older and is concerned where they're going to live next....consider selling them a home utilizing a reverse mortgage. In my case it was easy because we are also a mortgage lender that originates reverse mortgages throughout Florida. I hope this information proves helpful in your efforts.
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cash is king, and a large down payment plus reverse mortgage guidelines may work for retirees, but are useless for the majority.
That's what's great about a reverse mortgage...62 years or older....and appraisal value. 50% downpayment and they are in....considering some of the money being offered by short sale lenders (ie. $35k to faciliate a short sale) and if the homeowner has IRA, 401K which are all protected from a BK filing they may want to have it work for them. Granted this is obviously not for everyone nor even the majority. However, it like any other option is a viable option that should be considered if the homeowner is so qualified and interested. Plus, it gives the Realtor an opportunity to make another sale.
Stephen, thank you for sharing that. Proof that a short sale is not the end of the world :)