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.
FHA insures the vast majority of all reverse mortgages closed by lenders in the U.S. Lenders must follower their rules if they want the safety of the FHA mortgage insurance.
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 is not in the business of helping the investor as much as it is the actual resident who owns and lives in the property.
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.
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.
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.
Other types of properties qualify for a reverse mortgage. The problem is the mortgages are what is known as proprietary financing and are not regulated as much by FHA. The rules and benefits are far different.
FHA insures the vast majority of all reverse mortgages closed by lenders in the U.S. Lenders must follower their rules if they want the safety of the FHA mortgage insurance.
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 is not in the business of helping the investor as much as it is the actual resident who owns and lives in the property.
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.
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.
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.
Other types of properties qualify for a reverse mortgage. The problem is the mortgages are what is known as proprietary financing and are not regulated as much by FHA. The rules and benefits are far different.
About the Author:
For real knowledge in California about the reverse mortgage, head here to get yourself up to speed. Or get a comprehensive California reverse mortgage guide by going to this website.
posted by Debt Consolidation Loan at
10:29 PM
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