Of course, just because you can buy with little or nothing down doesn't mean it's wise for you to buy. Financial discipline must precede property investment. If your lack of cash results from a spend and borrow, no need to worry attitude, shape up your finances before taking on more debt even if it's constructive debt. Little or nothing down works best for people who manage their money well and or those who want to consciously use leverage to maximize their wealth building. If you fit either of those descriptions, here's the good news.
Have you taken control of your finances Or might nothing down deepen your failure to manage your money diligently During the past year or two, record numbers of marginal borrowers (homebuyers and investors) have defaulted on their mortgages. Mortgage Secrets definitely encourages you to acquire a portfolio of properties. For most people, property represents the best route to wealth. Definitely, read this chapter to learn the techniques of little or nothing down. But also, put Secret 4 (Shape up your borrower profile) into practice.
Now that your money is flowing, take a moment and assess your finances again (you should have created a detailed budget before even speaking with your counselor). Look at how much money is coming in, and how much you're spending. Have you elevated your lifestyle too much Are you holding back out of fear of not having quite enough money If after a few months your payments aren't meeting your budget, talk to your originator about changing your payment type. Maybe a sudden extra cost has come up and you need to switch from monthly payments to a line of credit, or a term plan. Your originator is there to help, so if after the closing things aren't going as planned, call him right away to talk about your options.
1 Your family and friends can advise whether you've been entirely honest about your spending habits, which could make a big difference in which payment schedule will work for you. Knowing what you're doing with your home and your money will also effect how they manage your finances. They may need to change your investment portfolio drastically, or file your taxes in a whole new way, simply because you got a reverse mortgage.
Sometimes, too, it's a good idea to write out a family budget. Show your lender that your monthly income exceeds your monthly spending. (VA loans may actually require this step.) Then back up your budget with proof financial records, cancelled checks, letters, and all of the compensating factors you can think of. With convincing written evidence, you'll break through qualifying guidelines that deter or delay ill-prepared borrowers.
The reverse mortgage counselor is your first contact in the reverse mortgage process. You can read all about counselors in Chapter 8, but in the meantime remember that the reverse mortgage counselor's job is to guide you through sorting out all of your options and to let you make your own decision. The counselors won't tell you what to do, but they will tell you what kind of impact each choice can have on your finances, your home, and your family in an unbiased way. Take their information to heart these people know their stuff.
Get All The Support And Guidance You Need To Be A Success At Budgeting. This Book Is One Of The Most Valuable Resources In The World When It Comes To Get Your Finances In Order Once And For All.