Reverse Mortgage Credit Score Requirements
What are the reverse mortgage credit score requirements? Have you begun investigating the ins and outs of reverse mortgages? If so, you may be wondering what the reverse mortgage credit
score requirements are. One of the pros of reverse mortgage is that it is easier to qualify for than a traditional mortgage.
Reverse Mortgage Credit Score, It’s not that simple!
A lot of mortgage programs have credit score requirements. The requirements might be set at 580, or 620, or 660, etc. It depends on the mortgage program. For reverse mortgages, the good news is there are not any numerical credit score requirements.
So, What Are the Reverse Mortgage Credit Requirements?
The reverse mortgage credit requirements used to be pretty lenient. They still are compared to a regular mortgage, but just not as lax as they were in the past. This all began for any case numbers dated April 28, 2015 or after. If your credit it less than perfect, keep reading because you may still qualify.
In terms of reverse mortgage credit requirements, we now look at five basic items.
What are the five credit items in question regarding a reverse mortgage?
First, we look at your payment history for your property taxes, mortgage, and installment loans (car payments, etc.). In regard to these, we review the pay history for the last two years. Hopefully these are paid on time in the last 12 months. However, you are allowed to have two 30 day late payments in the last 24 months.
Second, an underwriter will be looking at your revolving payment history for the last 12 months. Basically, you can’t have any MAJOR derogatory credit in the last year. It probably makes sense to define derogatory credit. As it pertains to a reverse mortgage, derogatory revolving credit includes any payment that is 90 days late or more.
The third thing we look at is this:
Are there any collections, charge offs, judgments, delinquent tax debt, or delinquent FHA insured mortgages?
Fourth, as per FHA reverse mortgage guidelines, we look at your credit history in regard to bankruptcy. You can have a bankruptcy that was discharged one day prior to your reverse mortgage application and get approved. The loan just needs to be structured differently than if you have great credit. Further, you’d need to have more equity to get it done, so these kinds of derogatory items COULD disqualify you, but they may not. This is especially true if it was discharged 24 months ago and your credit is great since then.
The Fifth Reverse Mortgage Credit Requirement ISN’T Really a Credit Requirement
The fifth thing we look at is your residual income. It’s not a direct credit requirement, but if you don’t meet the residual income requirement it could impact your ability to pay. Hence, if you don’t pass the residual income requirement, we may have to structure your loan differently. Also, it could disqualify you from the program all together.
The intent of this article is not to provide a comprehensive underwriting guideline. Trust me, that would bore the heck out of you. The intent is to outline the basic framework of the reverse mortgage credit score requirements.
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