Buying a Home with Reverse Mortgage WAS a Great Deal
A few months ago, HUD announced 2 wonderful things regarding reverse mortgages. The first attention-grabber was that a home can be bought using the reverse mortgage.
Before this, refinancing the existing house was the only thing that a reverse loan could be used for.
Borrowers are taking much pleasure in this. They can now apply the reverse mortgage in the same way as a typical mortgage, and come out in the end not having to compensate the lender monthly.
The second great thing I read nearly took me off my seat; it was how they would figure the loan. The appraised value of the home would be the factor detemining the actual loan amount, not the actual sale price.
As it stands for reverse mortgage refinances, there are several different things the banks look at when determining loan amount, but the value of the home is number one.
The mortgagee letter stated basically the same thing for home purchases. What you should understand is home purchase mortgage loan to values are normally based upon the sale price or the appraised value, whichever is lower.
Of course there would be more to it than the loan amount being based on worth, just like that.
Here's how it could play out. Say a borrower scrounges around and finds an amazing house really cheap. Its on the market for almost half of what it should be. In this circumstance, at closing the senior might not have to front anything out of pocket.
HUD is kind of old fashioned in their ways. Their regular loan programs are flexible and give some slack when it comes to credit, but they still want something from the senior. This something is the down payment.
Well guess what? HUD agrees with me. It is too good to be true. They eliminated that clause and have reverted to traditional lending practices.
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.
And yet, I received this just a couple of months before the change took place.
Reverse mortgage loans used for purchases are now based upon the sale price or appraised value, whichever is lower.
Before this, refinancing the existing house was the only thing that a reverse loan could be used for.
Borrowers are taking much pleasure in this. They can now apply the reverse mortgage in the same way as a typical mortgage, and come out in the end not having to compensate the lender monthly.
The second great thing I read nearly took me off my seat; it was how they would figure the loan. The appraised value of the home would be the factor detemining the actual loan amount, not the actual sale price.
As it stands for reverse mortgage refinances, there are several different things the banks look at when determining loan amount, but the value of the home is number one.
The mortgagee letter stated basically the same thing for home purchases. What you should understand is home purchase mortgage loan to values are normally based upon the sale price or the appraised value, whichever is lower.
Of course there would be more to it than the loan amount being based on worth, just like that.
Here's how it could play out. Say a borrower scrounges around and finds an amazing house really cheap. Its on the market for almost half of what it should be. In this circumstance, at closing the senior might not have to front anything out of pocket.
HUD is kind of old fashioned in their ways. Their regular loan programs are flexible and give some slack when it comes to credit, but they still want something from the senior. This something is the down payment.
Well guess what? HUD agrees with me. It is too good to be true. They eliminated that clause and have reverted to traditional lending practices.
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.
And yet, I received this just a couple of months before the change took place.
Reverse mortgage loans used for purchases are now based upon the sale price or appraised value, whichever is lower.
posted by Credit Counseling at
6:09 PM
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