Reverse Mortgage is an option if retiring
Dear Michael: Can you let me know what are the advantages and/or drawbacks with regards to a reverse mortgage? I am getting a lot of mail and phone solicitations about this type of mortgage (maybe because I am turning 65) and wanted to see if this is a viable option for me.
Answer: A reverse mortgage is a loan for senior homeowners who use a portion of the home’s equity as collateral. The loan generally does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away.
At that time, the estate has approximately 6 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not personally liable if the home sells for less than the balance of the reverse mortgage.
To be eligible for a reverse mortgage, the Federal Housing Administration (FHA) requires that all homeowners be at least age 62. The home must be owned free and clear or all existing liens.
If there is a mortgage balance, it can be paid off completely with the proceeds of the reverse mortgage loan at the closing. Generally there are no income or credit score requirements for a reverse mortgage.
| Dear Michael: We are buying a short sale home. After our home inspection we found some problems with the house and requested the seller to credit us $5000.00 for repairs. The seller said no. Is there any way that we can get a credit from the seller’s lender?
Answer: When you purchase a short sale it is important for you as a buyer to understand that the seller has no money. This is why they are approved and doing a short sale. Setting expectations before beginning the short sale process is essential. Your real estate agent is your first source of knowledge. As a buyer you must be made aware of the challenges you will face during the transaction. Asking for a repair credit makes perfect sense; problem is that the seller is broke! If the seller says no to the credit, then turn your attention to the short sale lender. In my experience some lenders, and very few, will agree to a legitimate request for a credit. You have nothing to lose by asking. Keep in mind that you are purchasing a short sale property that is probably sold at a lower price compared to other properties in the area, interest rates are at an all time low and the real estate market may have seen the bottom. If you love this home and it makes financial sense to you, then it is up to you to make the right decision. Dear Michael: I am purchasing a new construction condo that has just been completed. Is there a reason why my lender wants to have a guarantee from the seller that he has sold 50% of all the units? Answer: Financing new construction can be tricky because lenders will need to approve both you the buyer, as well as the condo complex itself. The lender is going to want to make sure that the project is completed according to their minimum standards, and that all of the legal paperwork and entities have been properly established. Most lenders also have a pre-sale requirement. This helps them feel more comfortable with the property as collateral for the loan. Pre-sale requirements can be as high as 70% sold so your situation is not uncommon. Michael Kayem is a Realtor with Re/max /Execs serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or e-mail them to him at: homes@agentmichael.com
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