The last thing you want to do is place an offer on a condominium unit only to find that you have a deadline and cannot perform, must waive contingencies, and then find out that HUD will not approve the project through no fault of yours or your lender’s. This is something to remember if you plan to purchase with a reverse mortgage considering the time constraints on most purchases and the fact that a project approval can take eight weeks or longer (if it gets approved). We see more projects being declined than approved by about a 2 – 1 ratio. So, the shocking truth about reverse mortgages with condominiums is that even though you may not owe anything on your unit, and you may meet the age requirements, the inability to lend with a government-insured loan in your project or even the project manager itself may prevent you from being able to get a reverse mortgage. But sadly, some HOAs still confused HUD approval with Section 8 and low-income housing and have refused to cooperate, forcing their senior owners into decisions they were not ready to make We had shown that the sales prices of many projects increased when they opened the project to more potential buyers. New homes in 55+ developments, where prices might have kept them from the home of their dreams if they had to pay 100% cash, are now attainable.Ī move that may have been out of the question with a traditional loan, like those who need to move closer to support systems like needed services, family, and friends, can do so with a reverse mortgage.How condo associations benefit from Reverse Mortgages? This loan works great for seniors seeking homes they may not have been able to consider otherwise. ![]() In the past, seniors purchasing homes were often forced to pay cash for a new home due to their income scenario.īorrowers who could not pay all cash, or wanted to use only some cash from the sale of their existing home, can now buy their new home using the reverse mortgage without ever having to make a monthly mortgage payment. Need to get a home that will better suit their needs.You can use a reverse mortgage to refinance your existing mortgage and purchase a new home. The loan may still be called due and payable if the borrowing spouse should leave home for any other reason, so borrowers need to consider this when making their plans and decisions about a reverse mortgage with a spouse who is not yet 62 years of age. It is also important to note that non-borrowing spouses are protected in the event of the death of the borrowing spouse. As such, they cannot access any line of credit funds that may still be available after the eligible borrower passes. They must also maintain the home in a reasonable manner, pay the property taxes and insurance on time, and live in the home as their primary residence.īorrowers and spouses must keep in mind that eligible, non-borrowing spouses are not borrowers on the loan. Unlike loans closed before 2015, spouses of reverse mortgage borrowers under 62 years of age at the time the loan closes are now protected as an “ eligible non-borrowing spouse. Older versions lacked spousal protectionįortunately, HUD changed its guidelines. Because these loans are not government-insured, they require no mortgage insurance, but the interest rates are higher. These loans are called jumbo reverse mortgages due to being used primarily for higher-valued properties. Therefore, those owning these higher-priced homes may prefer a private or proprietary reverse mortgage. Loan amounts are determined as a percentage of the appraised value or the HUD lending limit, whichever is less, so values higher than the maximum lending limit bring borrowers no additional funds under the HUD program. ![]() The insurance insures borrowers and lenders against the risk of default, but it also ensures that borrowers and their heirs will never have to repay the loan for more than the property is worth, regardless of how high the balance increases or if future property values fall.īorrowers with homes worth more than the HUD maximum lending limit of $1,089,300 receive no additional benefit for any additional value above that lending limit. ![]() You should always shop around to find the best deal available. Borrowers can often receive lender credits to pay for a portion or a substantial portion of their costs, but this is not always the case. 50% annual renewal mortgage insurance premiums (MIP) to pay.Įven though not paid out of pocket, the costs can be a substantial downside of the reverse mortgage to homeowners sensitive to closing costs. With the government-insured reverse mortgage (HUD HECM), borrowers have both 2% upfront and. ![]() Reverse mortgages can be expensive loans due to upfront financed origination fees. Reverse mortgages can have higher closing costs than traditional mortgages
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