A reverse mortgage is a powerful tool that will make it possible for your clients to downsize from MegaMansion to CozyCottage – it is simply another type of loan to add to your resources.
Clients qualify in a way similar to a traditional mortgages, but the qualification process is typically not as rigorous. Because no repayment is required until the borrowers no longer live in the home, the lender is looking to ensure that the borrowers can continue to afford the property expenses – taxes, insurance, utilities, etc. – associated with the new home (as well as maintain other commitments they may have made).
Your clients can do several things in advance to ensure smooth loan processing during the purchase process. Borrowers are required to attend Reverse Mortgage counseling. In California, this is followed by a mandatory 7-day cooling off period. So you should encourage your clients to make this happen early in the process to accommodate competitive closing times.
Your client can also provide the documents needed for the lender to perform “financial assessment”. Out of that process, the lender can provide a pre-qualification letter than can strengthen your offer.
The seller and/or seller’s agent may not be familiar with using a Reverse Mortgage to purchase a home. But rest assured, these types of loans have been around for more than 9 years. Real estate transactions in retirement states like Florida and Arizona, commonly use Reverse Mortgages.