/Olderadultcouplerelaxingonporch-93e818c26ef347ed9c6f8e3058154a1d.jpg "Can I Get a Reverse Mortgage on a Condo? 1")
If you happen to’re an older grownup, you might be able to get a reverse mortgage on a condominium. A reverse mortgage lets owners age 62 and up entry their dwelling fairness whereas remaining in the home—and retaining the title. Almost all reverse mortgages are dwelling fairness conversion mortgages (HECMs), insured by the Federal Housing Administration (FHA) and bought by FHA-approved lenders.
There aren’t solely strict borrower necessities for acquiring a HECM, but additionally guidelines defining which properties are eligible.
The principles described beneath apply to HECMs, so when you have a distinct sort of mortgage, contact your lender or mortgage servicer when you have questions or considerations.
Key Takeaways
- A reverse mortgage supplies earnings to assist retirees cowl prices like fundamental residing bills, medical payments, and residential repairs.
- Most reverse mortgages are dwelling fairness conversion mortgages (HECMs), insured by the Federal Housing Administration and bought by FHA-approved lenders.
- Reverse mortgages aren’t due till the final borrower sells the house, strikes out, stops paying property prices (e.g., taxes and insurance coverage), or dies.
- Debtors should be 62 or older, have substantial fairness within the dwelling, and reside within the dwelling as a main residence.
- Eligible properties embody single-family houses, two-to-four-unit houses with a borrower-occupied unit, and FHA-approved condominiums.
HECM Borrower Necessities
To qualify for a house fairness conversion mortgage (HECM)—the most typical reverse mortgage—you need to:
Moreover, your lender will confirm your earnings, belongings, month-to-month residing bills, and credit score historical past. They’re going to additionally guarantee you’ve got a historical past of paying your actual property taxes and hazard/flood insurance coverage premiums on time.
HECM Property Necessities
Properties should meet minimal FHA property necessities to be eligible for a reverse mortgage. Whereas there is a lengthy listing of particular requirements, the rules deal with three areas:
- Security—The property ought to shield the well being and security of the occupants.
- Safety—The house must be a safe funding, that means it is going to retain its worth all through the mortgage.
- Soundness—The house should be sound, with out bodily deficiencies or circumstances affecting its structural integrity.
Remember the fact that you may get a reverse mortgage on a condominium (or every other sort of dwelling) provided that it is your principal residence. The house will not qualify if it is your second dwelling or trip dwelling.
Offered they meet the minimal property requirements, the next forms of properties are eligible for HECM reverse mortgages:
- Single-family houses
- Two to four-unit properties (i.e., a duplex, triplex, or quadruplex) so long as one of many items is your main residence
- Townhouses
- Properties in deliberate unit developments (PUDs)
- Manufactured houses (constructed after June 15, 1976)
- Condominiums
Whereas some condominiums will not qualify for a reverse mortgage, most do. You’ll be able to seek for FHA-approved condominium tasks by location, identify, or standing on the U.S. Division of Housing and City Improvement (HUD) web site.
Newly constructed properties are eligible for a reverse mortgage provided that native authorities have issued a certificates of occupancy or its equal.
Ineligible Reverse Mortgage Properties
Whereas quite a lot of houses are eligible for a reverse mortgage, sure forms of properties are ineligible, together with:
- Boarding homes
- Mattress and breakfasts
- Manufactured houses constructed earlier than June 15, 1976
- Manufactured houses missing HUD certification labels or a everlasting basis
Can I Change My Thoughts After Closing on a Reverse Mortgage Mortgage?
If you happen to determine you made a mistake getting a reverse mortgage, you’ve got a three-day rescission interval after closing to cancel the mortgage with out owing any curiosity. If you happen to cancel after that, it’s important to pay again the mortgage proceeds you already acquired plus any accrued curiosity.
How A lot Can You Borrow on a HECM?
The quantity you may borrow will depend on the age of the youngest borrower (or eligible non-borrowing partner), the present rate of interest, and the lesser of the house’s appraised worth or $970,800—the HECM FHA mortgage restrict in 2022.
If your house is price extra and also you need to faucet into extra fairness, you may look right into a proprietary (aka “jumbo”) reverse mortgage. Nonetheless, take into account that proprietary loans usually have larger rates of interest and fewer client protections than FHA-insured HECMs.
What Occurs If a Reverse Mortgage Lender Goes Out of Enterprise?
As a result of a HECM reverse mortgage is roofed by authorities insurance coverage, the phrases of the mortgage will not change in case your lender goes out of enterprise. You’ll nonetheless obtain your agreed-upon payouts so long as you fulfill the mortgage obligations.
The Backside Line
Condominiums could be a sexy housing choice for older adults eager to spend much less time on dwelling upkeep whereas having fun with neighborhood facilities and, generally, single-story residing. A reverse mortgage will help you fund your retirement—even when you have a condominium—however take into account that these loans contain appreciable prices, together with mortgage insurance coverage premiums and mortgage servicing charges.
If you happen to determine a reverse mortgage is best for you, make sure to store round and examine the prices of the loans out there to you. Whereas lenders usually cost the identical mortgage insurance coverage premiums, the opposite mortgage prices—together with origination charges, closing prices, servicing charges, and rates of interest—differ by lender.