Which Properties are Eligible for an FHA Reverse Mortgage
I'm getting a ton of calls recently in regards to properties that in no way meet the standards for 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.
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.
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.
Then there are grey area properties, in which the owner lives their, but they are have more of a commercial use. A good example is a bed and breakfast. This won't qualify.
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.
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.
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.
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.
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.
Then there are grey area properties, in which the owner lives their, but they are have more of a commercial use. A good example is a bed and breakfast. This won't qualify.
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.
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.
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Learn insider's information, five big pitfalls to avoid for the California reverse mortgage. Other informations and a good old fashioned education can be had about the California reverse mortgage by following this link.
posted by Credit Counseling at
10:18 PM
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