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.
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.
As such, reverse mortgages are first and foremost owner occupied properties. I get many questions about financing second homes and investment properties. Not happening.
Now, does that mean their can be no investment activity or income from an eligible property? No, it simply means one must live in the property. one to four unity properties are acceptable if the owner lives in one.
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.
Financing the home is one thing. Some people call with home and hundreds of acres looking for financing on all of it. This won't happen. Only house on typical acreage will be financed.
If a home sits on one hundred acres and a home on 5 acres is customary, the lender will finance the value of the home on 5 acres and nothing more. The additional acreage must be surveyed 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.
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.
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.
As such, reverse mortgages are first and foremost owner occupied properties. I get many questions about financing second homes and investment properties. Not happening.
Now, does that mean their can be no investment activity or income from an eligible property? No, it simply means one must live in the property. one to four unity properties are acceptable if the owner lives in one.
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.
Financing the home is one thing. Some people call with home and hundreds of acres looking for financing on all of it. This won't happen. Only house on typical acreage will be financed.
If a home sits on one hundred acres and a home on 5 acres is customary, the lender will finance the value of the home on 5 acres and nothing more. The additional acreage must be surveyed 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.
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.
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Get the facts, five big pitfalls to avoid for the California reverse mortgage. Other informations and a spectacular article regarding the California reverse mortgage is at this site.
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