I was pleasantly surprised in November to see two things: One was a HUD mortgagee letter stating they would allow home purchases with a reverse mortgage.
Prior to this notice, using the reverse mortgage as a means to refinance was the only option seniors had.
But that's all changed. A reverse loan is now as functional as a regular loan, but the borrower does not have to repay the bank periodically. This is obviously a significant distinction to seniors.
The other part of the letter that was amazingly good, so good I had to read it three times to make sure I wasn't seeing things, was that the loan would be based upon value rather than sale price.
While the lender will take various things into account, the most important is the value of the house as determined by the appraisal.
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.
Say the loan was just based on value alone. If that were so, and a senior discovers a steal of a house running at forty percent below and nabs it, at closing time, hypothetically the borrower would owe nothing.
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.
It was all just a pleasant dream! The Dept. of Housing and Urban Development has seen the light and decided against continuing with this policy. Back to the old.
It's interesting HUD takes seemingly forever to put out their mortgagee letters to us lenders. You'd think they have teams of lawyers working day and night making sure the thing is right the first time.
Not so, this particular letter was out no more than two months before revision.
So in conclusion, remember that the lower number between the price and the value will be what determines the reverse loan amount, when used for a home purchase.
Prior to this notice, using the reverse mortgage as a means to refinance was the only option seniors had.
But that's all changed. A reverse loan is now as functional as a regular loan, but the borrower does not have to repay the bank periodically. This is obviously a significant distinction to seniors.
The other part of the letter that was amazingly good, so good I had to read it three times to make sure I wasn't seeing things, was that the loan would be based upon value rather than sale price.
While the lender will take various things into account, the most important is the value of the house as determined by the appraisal.
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.
Say the loan was just based on value alone. If that were so, and a senior discovers a steal of a house running at forty percent below and nabs it, at closing time, hypothetically the borrower would owe nothing.
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.
It was all just a pleasant dream! The Dept. of Housing and Urban Development has seen the light and decided against continuing with this policy. Back to the old.
It's interesting HUD takes seemingly forever to put out their mortgagee letters to us lenders. You'd think they have teams of lawyers working day and night making sure the thing is right the first time.
Not so, this particular letter was out no more than two months before revision.
So in conclusion, remember that the lower number between the price and the value will be what determines the reverse loan amount, when used for a home purchase.
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