Roger T. Watland Associates
MN Certified General Real Estate Appraiser
MN Real Estate Broker
Roger Watland
Minneapolis (Brooklyn Park), MN 55443
ph: 763-269-3254
fax: 763-561-6102
alt: (Cell)763-439-6009
rogerwat
FHA Insured Reverse Mortgages
The current purpose of this site is to provide opinion and informational services to the general public. The information is not always up to date. Please use your own due diligence. I hope my tips save you some time in your search for the facts about reverse mortgages and renovation loans.
News Flash: FHA HECM Reverse Mortgages available for purchases with case numbers assigned after 1/1/2009. National loan limit for FHA Reverse Mortgage increased to $417,000. effective immediately!
2nd News Flash: FHA HECM with case numbers assigned after 2-24-2009 are increased to $625,500. It's hard to keep up with the rescue package provisions and new HUD mortgagee letter updates. This is great news for some people with homes that did not get full credit for their value under the old limits.
For homeowners 62 and over, and planning to stay in their current home for several years or indefinitely, this product may help you keep your home in spite of rising taxes, utilities and maintenance.
If you have sufficient equity and your home meets HUD minimum property standards (or could be repaired to meet them), you will qualify. There are NO income requirements. There are NO credit requirements.
That said, a reverse mortgage isn't automatically the best choice for owner's 62 and above. In the right situation, however, it offers a breakthrough solution. When it becomes apparent to many customers that an FHA insured reverse mortgage meets their needs, they may stop me in my tracks with the comment: "Where do I sign?"
There are safeguards built into the HUD Insured reverse mortgage program. I may hear "Where do I sign?" too soon in the information gathering process:) The first step, after an initial inquiry, is to research the needs and options available to the customer, and determine that a renovation loan is something to consider.
If that is the initial conclusion and the customer agrees, the next step for them to run the lending scenario past a HUD certified reverse mortgage counselor. A list of local counselors is provided along with the HUD link. HUD approved Reverse Mortgage Counselors
The mandatory counseling step is one of several safeguards built into the program. The counseling can take as little as 45 minutes and can include interested family members invited to participate by the customer. It can laso be over the phone, which is very convenient.
I like the mandatory counseling by an independent 3rd party. For one thing, it keeps the competition honest. HUD mandates the loan terms, so one of the few ways to compete in the market place is to offer a high level of service and an atmosphere of no pressure.
AARP has been a long term provider of independent advice and education for homeowners considering a reverse mortgage. They have a calculator and examples that customers can learn from.
After an initial consultation, I recommend they play with varying scenarios, using the on line calculator on the AARP site. Many owners will want a reverse mortgage at some point, and it may be interesting for them to use the calculator to estimate the yield of a reverse mortgage at various ages of the borrower.
The age of the youngest person on title determines the possible loan size or line of credit amounts. Sometimes couples with a large age disparity decide to take the youngest one out of title, to improve the options.
There are lots of interesting options. I can help you brain storm through them, an independent HUD approved counselor will perform a separate analysis, and I highly recommend that potential borrowers perform their own research. Here are a few interesting links including one for the AARP on line calculator:
AARP Reverse Mortgage Calculator
AARP Reverse Mortgage Education Project
Inman News "Housing Bill Cuts Reverse Mortgage Fees"
FHA Insured Reverse Mortgages
FHA 203K Renovation Process (Abbreviated)
(Check loan limits for your county here)
FHA 203K loans come in two flavors: There is a Streamline version available that saves the expense and time of consultant. It is limited to $35,000 in renovation plus a possible $2,000 in energy efficient improvements. Renovation items must not require engineering, blueprints or a HUD renovation consultant.
The regular 203K program requires the involvement of a HUD approved consultant. Renovation is only capped by the FHA loan limits for the area.
In either case, a Realtor and/or buyer locate a home that is suitable except that it does not meet HUD minimum property standards and/or it has an unsatisfactory repairable condition such as an outdated kitchen, bath, mechanical systems.Before writing an offer, a quick feasibility analysis should be performed by the Realtor and/or purchaser, including repair costs and a market analysis to help predict the value of the home with intended repairs completed.
If it is likely to appraise out at purchase price plus cost of improvements or greater, write the offer and include something like this: "The buyer has applied for FHA 203K financing and the contract is contingent upon loan approval and buyer’s acceptance of additional required improvements as determined by HUD or the lender.
The seller should be made aware that in addition to appraiser access, they may have to grant access to contractors for bidding purposes."Disclosure is important to both buyer and seller because the FHA Amendatory Clause is not required for 203K loans.
When major renovation is involved, sometimes adverse property conditions are discovered and additional work is required. This is less likely with renovation under the 203K Streamline, since structural changes are generally not allowed.A 203K Streamline ($35,000 or less-no engineering reqired) does not require a HUD consultant. The appraiser is given a work description and based upon the description, appraises the home “as if the work is completed.”
Purchase Agreement Accepted:
Pre-approved buyer submits full approval paperwork to Roger Watland. The home buyer prepares the work write up and cost estimate. The Realtor is free to advise, if desired. On a non-streamline 203K, a consultant is required and the consultant generally helps the buyer prepare exhibits to speed up the loan process.In a non-streamline 203K, the consultant may also be the plan reviewer. The consultant will meet with the home buyer and (where applicable) the improvement contractor to make sure the exhibits (plans, specs, etc) are in accordance with program requirements.
Consultant reports to lender, lender approved loans move to closing. The purchase is funded and an escrow account for proposed renovation is established.
Please be advised: Remodeling can interfere with your daily routine.
Serving all of MN including the following cities:
Anoka Chaska Fridley New Hope Shakopee Apple Valley Columbia Heights Golden Valley North St. Paul Shoreview Blaine Coon Rapids Hopkins Oak Grove South St. Paul Bloomington Cottage Grove Inver Grove Heights Oakdale St. AnthonyBrooklyn Center Crystal Lakeville Osseo St. Louis Park
Brooklyn Park Eagan Maple Grove Plymouth St. Paul Burnsville
Eden Prairie Maplewood Richfield Vadnais Heights Cambridge Edina Mendota Heights Robbinsdale West St. Paul Champlin Farmington Minneapolis Roseville White Bear Lake Chanhassen Falcon Heights New Brighton Savage
(Search 203K Mentor on www.appraisersforum.com for more info)
Roger Watland
Minneapolis (Brooklyn Park), MN 55443
ph: 763-269-3254
fax: 763-561-6102
alt: (Cell)763-439-6009
rogerwat
