Can I Get A Reverse Mortgage With Bad Credit?
One commonly held notion about qualifying for a reverse mortgage is that you need good credit to be eligible. That’s a misconception. While your credit rating does come into play, it’s not the only—or even the most important—factor to qualify. Sometimes, your credit rating can be poor, and you can still get a reverse mortgage with bad credit.
Key Takeaway
Your credit score may impact your ability to qualify for a reverse mortgage, but it's not the only factor. Even with poor credit, you may still be able to get approved for a reverse mortgage if you meet other requirements. Before applying, take time to research and compare all of the options available to find the best one for your needs. A financial advisor or reverse mortgage counselor can also help you understand the process and make the best decision.
What Are the Credit Requirements for a Reverse Mortgage?
Credit requirements vary by lender, but the majority of reverse mortgage lenders have fairly straightforward credit requirements. Generally speaking, you’ll need a minimum FICO score of 620 in order to qualify for most types of reverse mortgage loans. That said, some lenders may go as low as 580 or higher if your other qualifications are strong enough.
That’s why it’s important to shop around when looking for a reverse mortgage. Different lenders may have different guidelines and standards, so you may find that one lender is willing to work with you even if your credit score isn’t perfect.
Can I Get a Reverse Mortgage If I Owe Taxes?
Tax debt can be another obstacle when applying for a reverse mortgage. Lenders don’t want to put themselves in the position of approving a loan and then having that loan taken away due to unpaid taxes. That said, it is possible to qualify for a reverse mortgage with tax debt if you can show that your debts are being managed or are in the process of being paid off.
Your lender will take into account any taxes owed when calculating your loan amount, so it’s important to keep this in mind. Additionally, it is possible for unpaid taxes to be included as part of the reverse mortgage loan. But you should make sure that you understand all terms and conditions before entering into an agreement with a lender.
Other Factors That May Affect Your Eligibility for a Reverse Mortgage
In addition to your credit rating and taxes owed, other factors that may come into play when considering whether or not you qualify for a reverse mortgage include:
Age - You must be at least 62 years old in order to qualify.
Property value - Your home’s appraised value will determine the amount of money you can get from a reverse mortgage.
Home equity - The majority of reverse mortgages require that the homeowner have at least some equity in their home.
Income - You don’t need to have a steady income in order to qualify, but lenders may consider your income when determining your eligibility.
Debt-to-income ratio - Your debt-to-income ratio will also be taken into account by the lender.
Can I Get a Reverse Mortgage if I’m Behind on My Mortgage?
If you’re behind on your mortgage payments, it could be difficult to qualify for a reverse mortgage. Lenders will take a close look at your current situation and determine if the loan would be in the best interest of all parties involved. Depending on how far behind you are on your mortgage payments, lenders may not approve a reverse mortgage. However, keep in mind that every situation is different and different lenders may have different policies.
Does a Reverse Mortgage Show Up on a Credit Report?
No, reverse mortgages do not show up on a credit report. They are not considered debt and there is no monthly payment required, so they do not affect your credit score in any way.
Do I Need Income to Get a Reverse Mortgage?
No, you do not need a steady income to be eligible for a reverse mortgage. Lenders may take your income into account when determining the amount of money you can get from the loan, but it is not necessary to have income in order to qualify.
When applying for a reverse mortgage it’s important to understand all of the requirements and the different factors that could affect your eligibility. With the right lender, you may be able to get a reverse mortgage even with bad credit or tax debt. It’s important to weigh all of your options before making any final decisions.
Bottom Line
It is possible to get a reverse mortgage with bad credit, but it’s important to consider all of the factors that can affect your eligibility and work with a reputable and experienced lender. Understand all of the terms and conditions before entering into an agreement, and make sure that you are comfortable with the loan terms.
If you have any questions about how to get a reverse mortgage with bad credit, or if you’d like more information on how to apply, contact us today!