Lifting the Fog Around Reverse Mortgage Property Types
There seems to be some confusion as what types of properties are eligible for financing with a reverse mortgage.
What one first must understand is that FHA insures the mortgage companies that lend money to senior home owners for reverse mortgages. With that in mind FHA makes all the rules.
FHA was originally set up during the Great Depression as a method of monitoring building and safety standards, but also it greased the skids for banks to lend and 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.
With this in mind FHA will not be available for properties that don't fall under the category of a principle residence. Investment homes and the rarely used cabin in the mountains won't qualify.
This does not pertain to all investment properties. For instance, if the owner lives on the premises of a one to four unit property, with tenants, the property would still qualify for financing.
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.
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.
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.
Additional home types include townhomes, condos, and Co-ops.
If you have a property not conforming with what I just laid out other reverse mortgage financing is available, but does not fall under the FHA umbrella. These are worth time to research but be careful.
What one first must understand is that FHA insures the mortgage companies that lend money to senior home owners for reverse mortgages. With that in mind FHA makes all the rules.
FHA was originally set up during the Great Depression as a method of monitoring building and safety standards, but also it greased the skids for banks to lend and 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.
With this in mind FHA will not be available for properties that don't fall under the category of a principle residence. Investment homes and the rarely used cabin in the mountains won't qualify.
This does not pertain to all investment properties. For instance, if the owner lives on the premises of a one to four unit property, with tenants, the property would still qualify for financing.
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.
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.
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.
Additional home types include townhomes, condos, and Co-ops.
If you have a property not conforming with what I just laid out other reverse mortgage financing is available, but does not fall under the FHA umbrella. These are worth time to research but be careful.
About the Author:
Learn insider's information, five big pitfalls to avoid for the California reverse mortgage. Many more answers and a good read about the California reverse mortgage is right here.
posted by Debt Consolidation Loan at
10:37 PM
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