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.
FHA has always been considered the first time home buyer’s mortgage. It’s not really a mortgage. It’s an insuring body for the mortgage and was set up in 1934 to increase home ownership.
It was and currently is not interested in investor loans on a small residential scale.
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.
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.
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.
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.
Other properties eligible for FHA financing are cooperatives, condominiums, and townhouses.
If you have a property not conforming with what I just laid out other reverse mortgage financing is available, but does not fall under the FHA umbrella. These are worth time to research but be careful.
Tags: finance, finance for the elderly, Finance:Mortgage, home mortgage, home mortgage for the elderly, mortgage, Real Estate, reverse mortgage, senior issues
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