Category: realtor

In Previous Article on the Subject we discussed two options on how a buyer that can not document sufficient income may still get a loan to purchase a home to live in. First option is come up with 30% or more down payment, and continue with a smaller amount of loan, the downside is, borrower is still obligated to make monthly payments. Second option is come up with something in the neighborhood of 40% – 60% cash downpayment for HECM purchase loan, the challenge is, borrower has to be 62 years or older. Is there a possible compromise ? We have talked to a mortgage investor outfit that is offering mortgage product similar to reverse mortgage, but do not have the age requirement. The product is not available in California yet, as of March of 2021, but it may come soon, so stay tuned.

WiseChoice Financial (a mortgage loan originator) will update you if you contact us below:

There are many buyers that have challenges in meeting the ATR rule (ability to repay), are they out of luck ? No.
Examples: high earning self employed business person or professionals receiving 1099 income generally are not treated as favorably as W-2 borrowers.

What if borrower has substantial cash lets say 30% to 60% of the property value. Quick answer: It may be doable.

Basic Rule of Thumb:
1 Any borrower with decent credit history can generally qualify with minimum of 30% (the more the better) equity (or cash downpayment), the monthly payment will be calculated, or course, according to private lender’s rules. Borrowers be prepared, however, to pay a little bit more than prevailing interest rates quoted in the QM loan markets (FHA, VA, or other government guaranteed loan products).
2 Borrowers aged 62 or older, have an extra option available for them, thanks to US Congress. This FHA insured loan (hence may have favorable rates) is called HECM or Reverse Mortgage, and can be used for purchase or refinance. This particular HECM loan type, does have its benefits and drawbacks, depending on how you see it. (Therefore, borrowers have to undergo HECM counseling prior to engaging in these types of loans). I personally have placed a number of borrowers over the years in either purchase or refinance HECM, and in their respective situations, every single one of them benefited. One of the main benefit is, namely, they are not obligated to make any mortgage payments, for as long as they live in the home as their primary residence. Note however, that they are still obligated to meet their on going obligations in property tax, fire insurance, property upkeep, and extra HOA payments, if any. If no mortgage payment is made, there are two main things to note. First, all the unpaid interest on HECM will be added to the principal balance. Second, borrowers’ lack of income becomes less of an issue in ATR rule. I will not say that any borrowers age 62 without job would qualify, but it is almost close to it, if borrowers have the necessary down payment (probably in the neighborhood of 40% – 60% cash downpayment, and depending on currently in effect interest rate, plus borrowers’ and property’s particulars).

WiseChoice Financial (a mortgage loan originator) can provide free phone assessment if borrower(s) may be suitable for HECM and what it may cost him/her/ them and address any questions or concerns you may have. Click setnextappointment.com now