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 62) 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 six 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 $5,000 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 know that the reason why the seller is selling his/her home as a short sale is that the seller has no money. Setting a buyer’s expectations before beginning the short sale process is essential. Your real estate agent is your first source of knowledge. You, as the buyer 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 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 in comparison to other properties in the area. If you love this home and it makes financial sense to you, then it is up to you to make the decision to move forward and close escrow. 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 percent of all the units? Answer: Financing new construction can be tricky because lenders will need to approve both the buyer, as well as the condo complex itself. Your lender is going to want to make sure that the project is completed according to their required 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 50 to 70 percent of all units sold before they will approve the loan. This is why many new construction projects have their own lender onsite; their lender has already established approval of the complex. You may have to consider the in house sellers lender if you want to get a loan on this condo, unless more than 50 to 70 percent of the units have been sold. Michael Kayem is a Realtor with Re/max estate properties 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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