Reverse Mortgages otherwise known as home equity conversion mortgages (Hecm) are a goods designed by Hud under their Fha loan schedule to allow those aged 62 or older to eliminate the mortgage price on their original residence. The reverse mortgage can also be a great way for someone with a big equity position in their original house to way that equity for other speculation purposes.
For purposes of this article I will focus on particular house residential estimation requirements. However, the reverse mortgage is not diminutive to only this type of property. One could use the Hecm for both multi unit properties and man-made homes under sure circumstances. I'll cover these asset types in a later article.
While the reverse mortgage is relatively easy to qualify for when compared to other loan products it does still have some foremost requirements. One of which is the appraisal. Here, Hud makes few concessions. In Hud's own words "The financial soundness of the Hecm schedule requires an correct measurement of asset value and asset condition." In other words, if the collateral for the loan isn't good when it comes time to sell the asset the schedule will go out of business.
I'm not going to go through the entire laundry list that appraisers use when evaluating a asset for an Fha loan. What I do hope to do here is help you prepare your expectations and maybe give you a concentrate of ideas as to what you need to do to get your home ready for the estimation process. Keep in mind that if your home doesn't currently meet Hud's estimation standards, you may be able to use some of the proceeds from the loan to make the vital repairs in order to get your home to acceptable condition.
Keywords to keep in mind when reviewing the condition of your home are Safety, Sanitation, and Structural Soundness. Anything viewed to put these things in question will likely show up as an issue on your appraisal. An example would be a missing or even loose railing on your stairway. How about protection bars on bedroom windows. Other example would be any signs of excessive dampness, structural settling, or pest infestation. Lead based paint can sometimes be a factor in an Fha appraisal.
Don't forget those often overlooked places like the crawlspace. Hud requires that the space be clear of all debris and be properly vented. The appraiser is also to be on the surveillance for excessive dampness or ponding of water. Other set of keywords to keep in mind are "future utility, stamina and economy of maintenance." In this respect the homes roof structure must be sound and free of leaks. Ventilation of attics and crawl spaces must be sufficient to reduce deteriorating effects of excess heat and moisture.
The bottom line: Take a good look colse to your home. Be as honest with yourself as possible. If there are any conditions that could be seen as risky to the occupants, any conditions that could lead to hereafter recurring and maybe expanding maintenance costs or possible catastrophic failure of the structure, they will need to be repaired. If not repaired prior to the appraisal, they will factor into the value of the home, and they will need to be repaired prior to the conclusion of your loan. While you may not be selling your home when applying for a reverse mortgage, it's a good idea to treat the estimation visit as if it were an open house. Think of Hud as the buyer. After all, they will likely be the one owning your home upon your greatest passing.
Reverse Mortgage assessment Issues