HUD Teases Seniors With Reverse Mortgage Home Purchase
A few months ago, HUD announced 2 wonderful things regarding reverse mortgages. The first attention-grabber was that a home can be bought using the reverse mortgage.
Up until now all seniors could do with the reverse mortgage is refinance their current home.
Borrowers are taking much pleasure in this. They can now apply the reverse mortgage in the same way as a typical mortgage, and come out in the end not having to compensate the lender monthly.
The second great thing I read nearly took me off my seat; it was how they would figure the loan. The appraised value of the home would be the factor detemining the actual loan amount, not the actual sale price.
As it stands for reverse mortgage refinances, there are several different things the banks look at when determining loan amount, but the value of the home is number one.
It was identical when a senior uses the reverse loan for the purpose of buying of a house. The difference to realize is when you get a reverse loan to actually buy a house, it is determined by the least of the cost and the worth.
For a reverse mortgage purchase to be based upon value only sounded almost too good to be true.
I mean think about it. What if a senior borrower came across a great deal. If that property was undervalued by 30 or 40 percent it's theoretically possible the borrower won't have to come to the table with any money to close.
The thing about it is HUD is a pretty conservative group. Although their forward mortgage programs are fairly loose as far as credit and down payment is concerned they still require downpayment. They always seem to ask the borrower to anti up in some manner.
Well guess what? HUD agrees with me. It is too good to be true. They eliminated that clause and have reverted to traditional lending practices.
As a lender, I find it unusual how long it takes to get these Housing and Urban Development letters. I would expect them to have a myriad of attorneys checking these things up and down.
And yet, I received this just a couple of months before the change took place.
In summary, the official basis of the reverse loan, when used to buy a new home, will be the lesser of the price or value.
Up until now all seniors could do with the reverse mortgage is refinance their current home.
Borrowers are taking much pleasure in this. They can now apply the reverse mortgage in the same way as a typical mortgage, and come out in the end not having to compensate the lender monthly.
The second great thing I read nearly took me off my seat; it was how they would figure the loan. The appraised value of the home would be the factor detemining the actual loan amount, not the actual sale price.
As it stands for reverse mortgage refinances, there are several different things the banks look at when determining loan amount, but the value of the home is number one.
It was identical when a senior uses the reverse loan for the purpose of buying of a house. The difference to realize is when you get a reverse loan to actually buy a house, it is determined by the least of the cost and the worth.
For a reverse mortgage purchase to be based upon value only sounded almost too good to be true.
I mean think about it. What if a senior borrower came across a great deal. If that property was undervalued by 30 or 40 percent it's theoretically possible the borrower won't have to come to the table with any money to close.
The thing about it is HUD is a pretty conservative group. Although their forward mortgage programs are fairly loose as far as credit and down payment is concerned they still require downpayment. They always seem to ask the borrower to anti up in some manner.
Well guess what? HUD agrees with me. It is too good to be true. They eliminated that clause and have reverted to traditional lending practices.
As a lender, I find it unusual how long it takes to get these Housing and Urban Development letters. I would expect them to have a myriad of attorneys checking these things up and down.
And yet, I received this just a couple of months before the change took place.
In summary, the official basis of the reverse loan, when used to buy a new home, will be the lesser of the price or value.
posted by Debt Consolidation Loan at
6:05 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home