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Thursday, March 25, 2010

No More "No Doc" Loans? Think Again

Reverse Mortgages Gain in Popularity

So, after all the fiascoes with subprime mortgages and lax underwriting standards (if you can call them that), "no doc" loans are a thing of the past, right?

For the most part.

However, there's still a niche of the market where lenders are approving borrowers with virtually no paperwork: reverse mortgages.

The catch, of course, is that with a reverse mortgage, the bank is making monthly payments to the borrower, not the other way around.

Reverse mortgages are particularly suitable for older, long-time homeowners who have modest income, but a ton of equity in their existing home.

Lenders are more than happy to let such "borrowers" tap that equity to make a reverse mortgage on the purchase of a "downsized" property.

Even more than with traditional mortgages, fees and terms on a reverse mortgage are key.

In other words, do your homework!

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