You are able to sell your existing home and buy a new home using a reverse mortgage, even if you have bad credit. A reverse mortgage is a home loan particularly for homeowners age 62 or older, and is secured by home equity–the percentage of your home’s market value which you have free of other liens. The proceeds from the sale of your existing home function as equity for your reverse mortgage, and you receive monthly payments from the bank.
Visit the Web Site of the the U.S. Department of Housing and Urban Development. HUD sets the standards for reverse mortgages; assess the eligibility guidelines to find out if you qualify.
Save your money. You must have cash on hand to pay the difference between the proceeds from the mortgage and the property’s purchase price, and any closing costs. HUD does not allow loans from relatives or cash advances from credit cards to be used to pay the difference with a reverse mortgage.
Contact local realtors who can help you look for a home. Schedule showings to examine. Let the agent know you are employing a reverse mortgage to buy the home, so that she avoids properties which don’t meet HUD’s criteria. A home must have one to four components; condominiums and manufactured homes have to meet HUD standards.
Compile your documents. You’ll need proof of income and assets, such as pay stubs, social security and bank statements, to use for a reverse mortgage. An acceptable credit score and background aren’t required, but you have to demonstrate you can afford to pay housing expenses, like homeowners insurance premiums, and some other up-front cash demanded.
Visit the official sites of creditors in your area to find out if they offer reverse mortgages. Contact the creditors directly in case you want to consult with a loan officer before applying. Ask a mortgage preapproval–a commitment from the creditor, in writing, to lend you money up to the specified sum. A preapproval will give you leverage in price negotiations with a seller.
Ask your real estate agent for home sales data that is comparable. The current selling prices of other homes in precisely the exact same area can help you determine your bid for your home. Have your agent prepare the offer. Create counteroffers to the seller if necessary till you reach a deal.
Schedule a home inspection. The home inspection is an evaluation of the home’s condition by a licensed practitioner and is constantly required by HUD for a reverse mortgage.
Select your payment program. You can receive a open line of credit up to the loan limitation or a fixed sum each month, or a combination of the two. Decide how long you want the payments to continuea fixed number of weeks or until the reverse mortgage limitation is reached.
Complete the mortgage loan process. Provide any documentation the loan officer asks. Review the mortgage documents before you sign. You will need to sign additional agreements needed for reverse mortgages, like a statement of your intent to occupy the home.