If you are like many senior homeowners, your home is your pride and joy. Perhaps you chose each individual bathroom fixture with care, after flipping through hundreds of catalog pages. Or you planted and nurtured each tree with your very own hands, and watched them grow taller every year. Or maybe, even when it came time to replace your roof, you researched options so well that you knew more about roofs than the expert at the hardware store. Now that you’re in retirement age, you may discover that the love and care you put into improving your home will pay off in the form of cash from a reverse mortgage loan. But does your home qualify?
Reverse mortgages are popular loans that many seniors age 62 and older are using to help access a portion of their home equity. With this loan, borrowers remain in their homes and do not have a monthly mortgage payment, as long as they comply with their loan terms, including paying their home insurance, taxes, and for ongoing maintenance. Before applying for a reverse mortgage make sure you learn as much as you can about the loan—including what home types may be leveraged with this viable retirement tool.
The most common type of home that qualifies for a reverse mortgage is a single-family home. As long as you occupy the home as your primary residence, your single family home could qualify.
Multi-family homes that contain up to 4 units, such as duplexes, triplexes, and quadruplexes, could qualify for reverse mortgage loans as long as one of the units is the main residence.
Although there are some condominiums that may not qualify for a reverse mortgage, the majority of them could qualify. Those that could qualify are confirmed on an approved list by the Federal Housing Administration (FHA), which can be found here: https://entp.hud.gov/idapp/html/condlook.cfm?qls=WPO_10815lib.promote001
If you find your property on this approved list, then it could qualify as a reverse mortgage condo.
Although many mobile homes are not eligible, manufactured homes could qualify as long as they are approved by the U.S. Department of Housing and Urban Development (HUD) and fulfill requirements set by the FHA. According to HUD, the following must be true in order to qualify:
Farms could also qualify depending upon the acreage of land and the value of the home. It is possible for the actual house on a farm to be valued at, as an example, one-fourth of what the entire farm is worth. Therefore, a reverse mortgage would not be calculated using the value of the entire farm property, but rather the value of the house that sits on it, regardless of the rest of the property. In addition, if the property is income-producing, it loses its eligibility to qualify for a reverse mortgage.
Although many types of homes could qualify for a reverse mortgage, there are a few types that do not. Here are a few homes that reverse mortgages do not cover.
Many potential borrowers wonder if it is possible to get a reverse mortgage on second homes or vacation homes. Unfortunately, the answer is no. Reverse mortgages were designed with the intent to help senior homeowners age in their principal residence. Thus, second homes and vacation homes do not qualify, as neither property is the borrower’s primary residence.
Although some manufactured homes could qualify, mobile homes do not. Homes covered by reverse mortgages must be considered permanent property attached to land.
Cooperatives are apartment-type dwellings in big cities like New York City, where residents own shares of the property rather than the property itself. Co-ops are usually owned by a corporation and run by a board. However, they do not qualify under reverse mortgages guidelines. According to the FHA, the co-op structure does not meet the requirement of the loan because it is not secured by real property, since it would be secured by shares instead.
Multi-family homes with more than four units do not qualify because they are considered commercial property and not residential property. Only residential properties are considered for reverse mortgages.
If you are still unsure about whether or not your home could qualify, speak with a reverse mortgage professional at 1-888-998-3147 to confirm. Experts at American Advisors Group can answer your reverse mortgage questions and provide details about the eligible home types and borrower qualification. If you and your home are eligible, a reverse mortgage loan may provide you a comfortable retirement—one you deserve to enjoy in the beautiful house that you call home.
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