Reverse Mortgage Doesn't Work for All Properties
There seems to be some confusion as what types of properties are eligible for financing with a reverse mortgage.
The Federal Housing Administration is the insuring body for 95% of all reverse mortgages. That means they write the rule book from which the mortgage companies follow if they wish to stay competitive.
A quick background of FHA, it was set up in the 30's to as a way to facilitate the financing of residential housing. In other words, it was set up to increase homeownership.
FHA, outside of large apartments, is only in the business of insuring properties in which the home owner actually lives on the premises.
As such, reverse mortgages are first and foremost owner occupied properties. I get many questions about financing second homes and investment properties. Not happening.
Some primary residences are also used as investment properties. For instance, duplexes, triplexes and four-plexes are all eligible for reverse mortgages if the owner lives in one of the units.
Common sense would tell us that if this were true then an owner occupied bed and breakfast would be eligible as well. No, FHA doesn't like it as it smacks of commercial use.
Some customers come to me with a home on large acreage. The lender will finance a home and land up to what is customary for the area.
A good scenario is a house on fifty acres. It's not hard to find this in the outskirts of Dallas or Houston. If many local homes have sold on this much land, it can fly otherwise it won't. I the norm is 2 acres, 48 acres will be survey off.
Manufactured housing is fairly misunderstood. It can work for a reverse mortgage but the home must have been built in 1977 or later, be a double or triple wide, and have permanent foundation.
Three other properties are available for reverse mortgage financing: co-ops, townhomes, and condos.
Non-FHA insured reverse mortgages are out there with greater flexibility in terms of property types. Be careful of these. A system of checks and balances doesn't exist with these loans as it does with an FHA insured reverse mortgage.
The Federal Housing Administration is the insuring body for 95% of all reverse mortgages. That means they write the rule book from which the mortgage companies follow if they wish to stay competitive.
A quick background of FHA, it was set up in the 30's to as a way to facilitate the financing of residential housing. In other words, it was set up to increase homeownership.
FHA, outside of large apartments, is only in the business of insuring properties in which the home owner actually lives on the premises.
As such, reverse mortgages are first and foremost owner occupied properties. I get many questions about financing second homes and investment properties. Not happening.
Some primary residences are also used as investment properties. For instance, duplexes, triplexes and four-plexes are all eligible for reverse mortgages if the owner lives in one of the units.
Common sense would tell us that if this were true then an owner occupied bed and breakfast would be eligible as well. No, FHA doesn't like it as it smacks of commercial use.
Some customers come to me with a home on large acreage. The lender will finance a home and land up to what is customary for the area.
A good scenario is a house on fifty acres. It's not hard to find this in the outskirts of Dallas or Houston. If many local homes have sold on this much land, it can fly otherwise it won't. I the norm is 2 acres, 48 acres will be survey off.
Manufactured housing is fairly misunderstood. It can work for a reverse mortgage but the home must have been built in 1977 or later, be a double or triple wide, and have permanent foundation.
Three other properties are available for reverse mortgage financing: co-ops, townhomes, and condos.
Non-FHA insured reverse mortgages are out there with greater flexibility in terms of property types. Be careful of these. A system of checks and balances doesn't exist with these loans as it does with an FHA insured reverse mortgage.
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Interested in the California reverse mortgage, follow this to get yourself up to speed. Or you can download an excellent California reverse mortgage guide by taking a trip to this website.
posted by Debt Consolidation Loan at
10:06 PM
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