Q & A: Is a Reverse Mortgage the Answer?

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My parents are having trouble financially. How do I know if they are eligible for a reverse mortgage? What exactly do I need to do in order to get them set up?

A reverse mortgage only has a few factors that determine eligibility. They need to be over 65 and need equity in their house. The only way to determine exactly how much they qualify for, though, is by speaking to a reverse mortgage professional as there are formulas that determine what they can get. A reverse mortgage can be a real life saver for older people who find themselves in financial trouble. The great thing about reverse mortgages is that there is mandatory counseling as part of the process. This advises people of all the pros and cons to make sure an informed decision is made.

Are there pros and cons to a short sale? I am a buyer looking for a home and I saw a nice home and then learned it is a short sale. Some people say it makes the home buying process longer because the bank is involved. Is that true?

It can be.  A short sale can be a good thing as pricing may be better than the market, but your concern can be the drawback. It really depends on how many loans/banks are involved in the short sale (if someone has two or three mortgages, it can take a very long time) and how much work has been done on it by the time you, as the buyer, submit an offer. A short sale can happen quickly with an experienced attorney and/or realtor that has done all of the preliminary work to get the short sale conditionally approved. I don't know how much information the realtor representing the home you are interested in can divulge, but that can make a big difference in how long the process takes.

I filed bankruptcy five years ago. How long after can I apply for a home loan? Will it be harder for me to get a mortgage after that time has gone past? I would really love to own a home again.

The filing date is less of an issue as compared to the discharge or dismissal date. The longest someone would need to wait to get a mortgage would be four years from the time of discharge or dismissal of the bankruptcy.  You need to be aware, though, that your credit will be looked at very closely. The best case would be that all payments since the bankruptcy be made on time.  There may also be some added requirements from you due to the bankruptcy. As long as that timeframe has passed, you should be eligible to finance the property, provided your credit has been managed well since you came out of the bankruptcy.

What is the difference between a short sale and a foreclosure? Is a foreclosure the same as a bank owned property?

A short sale is a situation where a homeowner owes more to lender(s)/creditor(s) on his or her home than the home is worth. The owner needs to work with the bank to negotiate a price that satisfies the bank and allows the owner to sell the property. Sometimes the owner has had late payments, but that is not always the case. A foreclosure indicates the owner had not paid their mortgage or taxes for such time that the lender has taken legal action to take over the property. In most circumstances, a foreclosure is the same as a bank-owned property.

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