• Question
  • reverse mortgage additional requirements

    Asked on 1/19/2008

    How does a recreational lease and the lack of reserves in a homeowners or condominium association effect one's ability to obtain a reverse mortgage

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  • Categories: Retirement Planning, Qualifying, Reverse Mortgages, Housing

Answers

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  • I don't think I have sufficient information to answer your question. However, to qualify for most reverse mortgages you must:

    1) Have sufficient equity in your home. (The actual amount of equity required to qualify for a Reverse Mortgage varies depending upon your county, your age and the current interest rates. In most cases you must not owe more than 75 percent of your home’s current value. For example, if your home is valued at $200,000, then your outstanding mortgage would need to be less than $150,000 – in most cases.)

    Furthermore, second homes, apartment buildings and homes less than a year old are not usually eligible for a Reverse Mortgage though some condominiums do qualify.

    For more on whether a reverse mortgage is right for you, go here:
    http://www.newretirement.com/Services/Reverse_Mortgage_Who_Should_Consider.aspx

  • Login to rate this answer:   Answered on 1/23/2008
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  • You are correct in wondering if the lack of reserves in a Homeowners Association would affect your ability to obtain a reverse mortgage.Each developement must either be already FHA approved, or have a spot condo certification. I dont have the figures in front of me, but if there isnt sufficient reserves in the associations accounts, then the Spot Condo Certification will be denied, and the loan will be declined. Also, if the Condominium development is occupied by more then 50% rentals, it will also trigger a decline. I would be happy to look deeper into the actual figures for you if youd like. Thankfully, in the 6 plus years I have been originating reverse mortgages, I have only seen this happen once.I am a Reverse Mortgage Specialist with Financial Freedom, a preferred lender with New Retirement. Please let me know if you have further questions. Tam Field FinancialFreedom :)

  • Login to rate this answer:   Answered on 4/8/2008
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  • It is an FHA rule - A recreational lease allows the developer to have control and or make decisions with regards to the development. FHA will not fund an RM if there are recreational leases that are in place. Typically these leases are very long -- 90 ro 100 years. At some point Financial Freedom was allowing their properitary product -- the cash account and funding RM's in some developments. A lot of lenders have discontinued their Cash Account due to declining market conditions - and FF is no exception -- they no longer have a cash account product.

    Another deal killer is a "Master Condominium Board" -- again -- an FHA rule.

  • Login to rate this answer:   Answered on 9/10/2008
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.