What To Do If There is Not Enough Equity For a Reverse Mortgage?
With the refinance boom that lasted from the early 2000s to about 2008, many homeowners, especially people who had never refinanced before jumped at the opportunity to do a cash-out and take out a huge chunk of equity. Many people refinanced many times. They were able to do so because of how quickly the home values kept rising. However, as a result of the housing crash, many of those same homeowners now owe more than their home is worth. Senior citizens were no exception to the rule. Many seniors also refinanced and took cash out.
The problem now is many of those same senior citizens are not able to qualify for a reverse mortgage because they do not have enough equity in their home. To qualify for a reverse mortgage, a homeowner must have at least 50% equity of the home value.
There are not that many options if you are in this boat unless you are able to somehow come up with enough cash from family members to help get your equity over the 50% threshold used in reverse mortgage calculations.