Lifting the Fog Around Reverse Mortgage Property Types
The goal here is to enlighten and educate those who may be getting misinformation about what is and is not possible in terms of property types available for 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.
FHA has always been considered the first time home buyer's mortgage. It's not really a mortgage. It's an insuring body for the mortgage and was set up in 1934 to increase home ownership.
FHA, outside of large apartments, is only in the business of insuring properties in which the home owner actually lives on the premises.
So, the first thing to understand, as a basis for understanding FHA insured reverese mortgages, is that the reverse mortgage is for owner occupied properties. Rental homes and second home do not qualify.
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.
What if the owner lives in the property and it is used as a bed and breakfast? No. FHA will not allow for any commercial purpose even if the owner lives on site.
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.
For example: if a home resides on 200 acres and the typical home in the area is on 3 acres, the mortgage company closes a loan on the home and 3 acres only. The remaining acreage can not be part of the transaction.
In some rural areas I get calls regarding manufactured homes. This is okay under certain conditions: Home is built after 1976, double or triple wide, and sits on an approved FHA foundation.
Other properties eligible for FHA financing are cooperatives, condominiums, and townhouses.
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.
FHA has always been considered the first time home buyer's mortgage. It's not really a mortgage. It's an insuring body for the mortgage and was set up in 1934 to increase home ownership.
FHA, outside of large apartments, is only in the business of insuring properties in which the home owner actually lives on the premises.
So, the first thing to understand, as a basis for understanding FHA insured reverese mortgages, is that the reverse mortgage is for owner occupied properties. Rental homes and second home do not qualify.
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.
What if the owner lives in the property and it is used as a bed and breakfast? No. FHA will not allow for any commercial purpose even if the owner lives on site.
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.
For example: if a home resides on 200 acres and the typical home in the area is on 3 acres, the mortgage company closes a loan on the home and 3 acres only. The remaining acreage can not be part of the transaction.
In some rural areas I get calls regarding manufactured homes. This is okay under certain conditions: Home is built after 1976, double or triple wide, and sits on an approved FHA foundation.
Other properties eligible for FHA financing are cooperatives, condominiums, and townhouses.
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.
About the Author:
Learn insider's information, some major California reverse mortgage blunders to make. Other informations and a spectacular article regarding the California reverse mortgage is at this site.
posted by Credit Counseling at
10:22 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home