Managing our finances as we approach or begin retirement can be a challenge few people think about until they actually face it. Our decisions made earlier in life, like mortgages and credit scores, can also have a big impact, even the mistakes we made decades ago!
Are there still options for mortgages? Well, one is known as a reverse mortgage credit score. If you want to know more about these and how they work, I will provide some details about them in this article.
What is a Mortgage?
Now most people already know what it is. Still, I think it’s a good idea to mention them briefly, if only to set the stage for the rest of this topic. You can get some more details here: https://www.forbes.com/advisor/mortgages/what-is-a-mortgage/. It’s basically a loan that people take out from a bank to help pay for a house (minus the down payment that’s due at the time of purchase).
As with most other types of loans, they are repaid over time and interest is charged. The main difference is that these are made against the property, so if you don’t repay the bank can seize your property. These are known as seizures.
What is a reverse mortgage, then?
The most important thing to know about them is that they are a form of financing. They let a homeowner borrow against the equity in their property. They’re usually only available to owners aged sixty-two or older, so keep that in mind if you’re looking to pursue one.
Regarding the loan, there are a few options to receive the funds. For example, you could get it in a lump sum, or as a fixed payment each month, or even as a line of credit. There are several ways to search for a reverse mortgage credit score requirement, so keep an open mind to the different possibilities.
What can they be used for?
So why would we bother to take out a loan like this, anyway? After all, trying to sort through the required credit score and making sure we qualify can be a bit of a hassle. Well, there are many apps for them.
On the one hand, they can help you with your daily expenses. Of course, most of us who are retired have money from our individual retirement accounts, pensions, or other sources such as Social Security. However, things can still add up faster than we realize!
Thus, you could use these funds to improve your overall lifestyle. Plus, they could be used to fund home repairs or improvements that have been on your to-do list for a long time. These things can certainly be expensive!
Certainly some extra cash flow or income could be used for something like that, which can also contribute to that improved lifestyle that I mentioned. On a less cheerful note, they can be used to pay medical bills. Another fact of life is that these tend to add up as we get older.
So, these are just a few of the potential reasons people might get a reverse mortgage. There are others, but I won’t bore you with other lists. Consider asking around and see if anyone you know has had one!
So what are the credit requirements?
In some ways, it’s pretty crazy that three small numbers rule so much of our lives. Yet that is exactly what credit scores do to many people around the world. You can read more about them in this article, but it’s more likely than not that you already know them, at least to some extent. It is difficult to retire without having to take care of it in one way or another.
What’s so great about these types of loans is that there is no specific numerical requirement in terms of FICO score. Instead, lenders who go through the Department of Housing and Urban Development will simply look at your payment history. This is the most important thing they will look at.
Now, if you have a lower score, they’ll probably do some research to see why that’s the case. This is so that they can determine if there were any extenuating circumstances, which will impact whether or not your application is approved.
Overall, there are generally fewer hurdles to jump through with these loans than with other types. That’s certainly good to hear, because who wants to spend a lot of time worrying about these things?