I mentioned in my last post that quite often I am asked why people apply for a reverse loan and what are the most common reasons.
In my previous post I spoke about a client who had been using her credit cards to pay for her “cost of living” expenses, because her Social Security income was too low to get her through each month.
However, the downside to using credit cards, is eventually you use all of the credit available on them, but still have an ongoing payment that now cannot be met.
You can read about Sylvia and how we managed to eliminate that debt and give her additional money each month from a reverse mortgage in the previous post.
My next example is Bonnie and Jim ( No last name for privacy reasons) who had had a major medical disaster destroy their lives. Medical emergencies are probably the number one reason for causing personal financial collapse as no one is prepared for the medical expenses that come with aging.
He had a great career in the movie studios as a transportation driver and life was quite good for them until he developed diabetes.
Unfortunately like so many men, Jim ignored it and continued to eat and drink whatever he wanted and did not take care of his health. Needless to say he became very ill and almost died resulting in the loss of both of his legs and kidneys to the disease.
He was no longer able to work and they quickly ran out of their savings to pay medical bills and their regular ongoing monthly expenses and used up all of the funds that were available on their credit cards leaving them in a terrible, crushing financial situation.
They owed the IRS money, all the credit cards and ended up doing a Chapter 13 Bankruptcy but somehow managed to continue to make their mortgage payments and ultimately repaid the money they owed to the IRS
I was referred to them by a CPA and in spite of the ugliness of their credit and the bankruptcy, I managed to get them approved for their reverse loan, relieving them of the burden of mortgage payments, plus additional funds that they were able to receive at the close of Escrow.
Making their life just a little bit better.
Jim and Bonnie are doing very well as of this writing and even though their credit had been ruined, I was still able to get them approved for their reverse loan and help them move forward and into better circumstances.
Reverse mortgage loan applications need the following documents from the borrower and it’s very important that they provide everything that is needed to process their loan in a timely manner.
How quickly a loan funds and closes mainly depends upon the borrower’s cooperation in providing whatever the lender as requested.
- Copy of photo I.D. Typically a current Driver’s License or a Passport
- Copy of Social Security Card or a Medicare Card
- Copy of Social Security Awards Benefit Letter. These are mailed out each December and show how much Social Security income will be received in the following year.
- (2) Months of checking acct statements ( All pages) to show SS deposits or any other payments such as a pension/retirement check.
- Most recent statement for any existing mortgage(s)
- Copy of Homeowners Insurance Declaration Page
- Complete copies of most recent quarterly statements for investments and or 2 months of bank statements. All pages.
- Copy of Trust if one is in place. The new loan will record in the name of the Trust.
- Name and Phone number for the management company if there is a Home Owners Association.
If the borrower is currently employed or receiving income from rental properties, the following items will also be required along with the list above this line.
- (2) Years Federal Tax Returns – All Schedules
- (2) Years W’2’s and any 1099’s
- Most recent Year-to-Date Pay Stub for the previous 30 days.
Yes, I know. It’s a lot of documentation and it’s very similar to what is needed for a traditional loan. However, it continues to quite easy to be approved for a Reverse loan compared other mortgages.
Plus, you won’t have any payments to make on it, so don’t be intimidated by this list.
If the reader has any questions about this or anything else about Reverse loans, please call me. I’m here to help you through the confusion.