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.
Prior to this notice, using the reverse mortgage as a means to refinance was the only option seniors had.
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.
Another part of the letter really threw me for a loop, in a very good way. HUD was allowing lenders to loan based upon the appraisal rather than the sale price. This was an amazing thing for me to read.
While the lender will take various things into account, the most important is the value of the house as determined by the appraisal.
It was identical when a senior uses the reverse loan for the purpose of buying of a house. The difference to realize is when you get a reverse loan to actually buy a house, it is determined by the least of the cost and the worth.
That makes more sense, doesnt it? It couldnt be as easy as simply based on home value.
I mean think about it. What if a senior borrower came across a great deal. If that property was undervalued by 30 or 40 percent it's theoretically possible the borrower won't have to come to the table with any money to close.
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.
It was all just a pleasant dream! The Dept. of Housing and Urban Development has seen the light and decided against continuing with this policy. Back to the old.
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.
Believe it or not, this notice was released 60 days prior to the amendment.
In summary, the official basis of the reverse loan, when used to buy a new home, will be the lesser of the price or value.
Prior to this notice, using the reverse mortgage as a means to refinance was the only option seniors had.
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.
Another part of the letter really threw me for a loop, in a very good way. HUD was allowing lenders to loan based upon the appraisal rather than the sale price. This was an amazing thing for me to read.
While the lender will take various things into account, the most important is the value of the house as determined by the appraisal.
It was identical when a senior uses the reverse loan for the purpose of buying of a house. The difference to realize is when you get a reverse loan to actually buy a house, it is determined by the least of the cost and the worth.
That makes more sense, doesnt it? It couldnt be as easy as simply based on home value.
I mean think about it. What if a senior borrower came across a great deal. If that property was undervalued by 30 or 40 percent it's theoretically possible the borrower won't have to come to the table with any money to close.
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.
It was all just a pleasant dream! The Dept. of Housing and Urban Development has seen the light and decided against continuing with this policy. Back to the old.
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.
Believe it or not, this notice was released 60 days prior to the amendment.
In summary, the official basis of the reverse loan, when used to buy a new home, will be the lesser of the price or value.
posted by Debt Consolidation Loan at
5:36 PM
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