Don't delay reverse mortgage plans; Government Financial Assessment could be restrictive

Financial assessment. Under the previous HECM rules almost anyone with sizeable home equity could take out a reverse mortgage. 

Soon potential borrowers must first undergo a detailed financial assessment to ensure that they will be able to meet future tax and insurance obligations. 

Lenders will soon be required to review the potential borrower’s credit history, analyze all income from earnings, IRAs, pensions, 401(k) plans and Social Security and weigh it against the borrower’s estimated living expenses (including other outstanding debts).

If a potential borrower seems as though he might not be able to pay his expenses he may be required to set aside money in a “set aside” fund which can cover future obligations if needed. "Some may not qualify for a reverse mortgage at all under these new rules", says Warren Strycker, Proficio Mortgage loan officer in Western Arizona.

Those anticipating a reverse mortgage in the future should not delay as these assessments may be burdensome or even prevent an application, according to reverse mortgage ndustry sources.