Reverse Mortgage - How to Use a Reverse Mortgage to Prevent Foreclosure

How to Use a Reverse Mortgage to
Prevent Foreclosure

Reverse mortgages can be an effective way to protect you as a homeowner from foreclosure. If you are a homeowner and the youngest person on the title to the home is over the age of 62, you maybe eligible for a reverse mortgage even if you are bankrupt or at risk for foreclosure.

Foreclosure

If you think you are at risk for foreclosure and are interested in a reverse mortgage, you should start moving as quickly as possible. You will most likely have to get a short pay agreement in which your lender reduces the balance you owe on the mortgage. That agreement often takes time to negotiate.

Select a reverse mortgage specialist
Contact the bank that holds your mortgage
1. Explain to your bank that you need a short pay or risk going into foreclosure
2. Your reverse mortgage specialist can help you with the negotiations
Apply for a reverse mortgage

The proceeds from the reverse mortgage can be used for whatever purpose you desire, which in this case may include paying collectors, judgments, and liens. Although reverse mortgages carry fees, the fees will be paid out of the proceeds so you should not have out of pocket expenses associated with the reverse mortgage other than counseling and appraisal. As such, you do not need to have much cash on hand to complete a reverse mortgage transaction.

If you are approved for a reverse mortgage, you will be able to stay in your home with no mortgage payments for the rest of your life (or until you sell the home).

Bankruptcy

You can still get a reverse mortgage if you are bankrupt.

If you have filed under Chapter 7, you must have discharge papers
If you have filed under Chapter 13, the reverse mortgage must be approved by the court and the trustee

If you think you may be nearing foreclosure or bankruptcy, a reverse mortgage might be a worthwhile possibility to explore.

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