So you need help keeping up with mortgage payments but aren’t sure if you should apply for a reverse mortgage or a loan modification. Here are some things to consider when comparing the two programs.
Reverse Loans for Seniors
Only people who are 62 and up can apply for a reverse mortgage. You can apply without a credit check but do need to get an appraisal on your home. Reverse home loans pay money directly to borrowers based on age, home value, and current mortgage rates. You can use the proceeds from a reverse home mortgage for any purpose and don’t have to repay it until you move or die.
Mortgage Loan Modifications
Only distressed homeowners who meet certain qualifications can apply for a mortgage loan modification. You must be experiencing a financial hardship that is making it tough to make mortgage payments. Your mortgage payment also must be more than 31% of your monthly gross income. Even if you aren’t behind on a mortgage you could be eligible for help if you are at risk of defaulting on it.
Some Americans have received help through the government’s loan modification program and have lowered their monthly payments or gotten out of adjustable rate mortgages (ARMs). But initial loan modifications are temporary, leaving many homeowners waiting to have the changes made permanent. Having a mortgage modified also can hurt your credit score.
Closing on a Reverse Mortgage
Once you close on a reverse mortgage you’re done. There is no more paperwork or final approvals to wait for. You get your money as lump sum or in installments and can use it for whatever you want.
Get the facts on reverse mortgage pros and cons from a housing counselor approved by the Department of Housing and Urban Development (HUD). If you think the government’s loan modification program can help you, contact your loan servicer.