Q & A: Is a Reverse Mortgage a Good Idea?

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I was recently looking to purchase a home. We were declined for a mortgage due to some outstanding debt. We have since paid off that debt. How long do we need to wait to reapply?

In general, it takes between 30 to 60 days to ensure that any payments made reflect on credit. To be proactive, you may want to run a credit report on yourself to see if the debts are showing as paid. That will help alleviate some of the guesswork. 

My ex-husband filed bankruptcy when we were married. We are now divorced and I want to purchase a property. If he filed while we were married, does that make it impossible for me to get a loan?

That actually depends on whether you were brought into the bankruptcy. If you were brought in, or joint accounts were put into the bankruptcy, it may pose a serious challenge to getting a mortgage. You would really need to check on this as soon as possible to at least know where you stand.  While it doesn't sound like you were part of the bankruptcy, be aware that it can take anywhere from 2 to 4 years from the time the bankruptcy is discharged to be able to secure a mortgage. There are certain situations where extenuating circumstances can be considered, but that's the general guideline.

What are the benefits of a reverse mortgage? I am trying to decide if it is right for my parents.

A reverse mortgage can be a great thing for people in certain circumstances. A reverse mortgage removes any mortgage payment on the house (the owner is, however, still responsible for taxes and insurance) and may allow the owner to receive monthly payments, access to a line of credit, or a lump sum payment. Be aware that a reverse mortgage is still a mortgage, so there is principal and interest that accrues on the house, but that is only paid back when the property is sold or the loan is refinanced. The property must be a primary residence, and that cannot change. Also, there is a chance there may be no equity in the house when it does come time to sell. However, you can never be left owing money back to the bank, nor can you be foreclosed on unless you do not pay taxes. There is mandatory counseling as part of the reverse mortgage process which clearly lays out the pros and cons.

What are the pros of listing your house for sale by owner? Are there any? I like a home that the owners are selling but I don't know how to handle the transaction myself.

The obvious perceived "pro" is that there is no brokerage commission to pay, but at what price? The real estate professional will help you to make your property show-ready, price your property properly out of the gate; conduct Open Houses so that buyers feel more comfortable when the sellers are not home; pre-qualify the buyers, and employ their expertise in negotiating the highest and best price on your behalf.

Dottie Herman is CEO of Douglas Elliman. If you have a real estate question for Dottie, please send it to: Reporters@WPCnews.com