What to do should my home need REPAIRS?
Reverse Mortgage Myth
If a borrower outlives their life expectancy, the lender will evict them.
Reverse mortgage lenders put no time limit on how long seniors can stay in their homes. Since homeowners still own the property lenders cannot evict them, provided they follow the program guidelines.
In This Articles We Will Discuss…
What to do should my home need REPAIRS with a Reverse Mortgage?
Repairing or renovating a home is a major reason for getting a Reverse Mortgage. However, there are three kinds of repairs:
- Repairs that are expected to be done before closing;
- Repairs where funds are set aside for completion after closing; and
PRIOR TO CLOSING RERAIRS
Regular repairs that are expected to be completed before the loan can be ready for closing comprise health or safety concerns and structural defects. Health and safety concerns may comprise standing water, black mold, or even clutter that prevents proper navigation of the home. Structural defects may comprise foundation issues, roof leaks, and electrical issues.
A fraction of the principal limit may be earmarked for most other repairs. The funds can be reserved for the payment of those repairs. Irrespective of how minor the repair may be, like a $100 quote for a small repair, the lender may want a minimum earmarked amount plus an extra fee for re-inspection.
Reverse Mortgage Myth
Reverse mortgage lenders pressure seniors to buy additional financial products.
We do not sell seniors any other financial products. Not every reverse mortgage lender operates that way. In fact, we have a policy to safeguard seniors from buying unsuitable financial products with reverse mortgage proceeds.
When a homeowner resolves that they wish to stay in a certain home, they usually carry out renovations that will make their retiring years comfortable. Such improvements can include a walk-in bathtub, handrails in the bathrooms, and railings or ramps near outside steps.
What about a major remodel or face-lift of the home? HUD has set a limit of 15% of the maximum due sum for major renovations.
HERE’S an EXAMPLE
The value of Jodie’s home is $200,000. Regrettably, the home requires a lot of repairs, and the costs are estimated at $45,000. HUD’s repair limit for this home is valued at 15% of $200,000 or $30,000. Jodie is required to have $15,000 of the repairs completed before closing to meet the home’s repair limit.
24 CFR § 206.47. PROPERTY STANDARDS; REPAIR WORK
The Necessity for Repairs. It is mandatory that properties meet related property standards of the Secretary to be eligible. Properties that fail to meet the standards must be fixed to make sure that the repaired home will serve as acceptable security for the insured mortgage.
Declaration that repairs are made. The mortgage may be closed before the completion of the repair work if the estimated cost of outstanding repair work will not be more than 15% of the maximum claim amount and the mortgage comprises provisions ratified by the Secretary about payment for the repairs.