Working with A Knowledgeable Professional

I saw an interview on a Texas television news station that shared a situation about a senior couple who had started the reverse mortgage process incurring thousands of dollars in home repair costs to find that they still can’t qualify for a reverse mortgage. It is becoming a legal nightmare.

Though I don’t know the details about this unique situation, it does raise some concerns about the reverse mortgage industry, not from a fraudulant standpoint (though that is always a concern for me), but more so in the area of discernment and professionalism in the minds of the reverse mortgage consultants involved. In watching the news story, it appeared that there was some sort of “promise” in regards to attaining a reverse mortgage as soon as the home was brought up to FHA standards. I hate to think that anyone would promise any sort of loan as loans always fall through due to the fault of no one, simply underwriting standards. Additionally, the process in which repairs are completed in the midst of the application process is critical. Without being proficient in the process the homeowner can be left with promises unfulfilled.

Here are some helpful hints:

1. As in most real estate transactions, be sure to work with people who have experience with your unique situation. It is true that every loan application is unique in themselves, but there are a lot of similarities. Experience can prevent a lot of stress on all parties.

2. Don’t do any repairs or changes to your property unless it is directly required by FHA or the lender. Unnecessary repairs could be costly and a simple opinion from a “senior consultant” doesn’t hold any weight. The FHA appraiser or FHA inspector may be able to tell you what is needed to meet FHA guidelines. These are professionals who understand and are experienced, and are held liable for meeting FHA’s requirements.

3. The only expense that may occur depending on your lender/broker is the up front appraisal fee. Though this is typically paid for at closing, periodically it is required up front. There shouldn’t be other up front costs. I always feel that if there were a lot of up front costs (paid in cash to lender), the reverse mortgage programs wouldn’t be so attractive. Most seniors looking into a reverse mortgage are asset rich and cash poor.

Feel free to contact me if there are other concerns that you may have. Each state operates a little different. I am aware of how Oregon and Washington operate.

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