Can I Get A Reverse Mortgage For My Condo?

by Peter G. Miller
January 29th, 2008

Robert asks if he is a good candidate for a reverse mortgage.

“My Florida condo is worth approximately $400,000. It has a $99,000 first mortgage and a $123,000 home equity loan. I would like to pay off both and have about $20,000 to save as a reserve. Can I get a reverse mortgage?”

The answer, I suspect, works like this:

First you need to contact reverse mortgage lenders licensed in your state. Then you need to ask a few basic questions:

*What is the maximum FHA loan available in your area? (Remember, HUD insures about 90 percent of all reverse mortgages.) In your situation you are looking for $242,000 plus closing costs ($99,000 + $123,000 + $20,000)

*Are you age 62 and above? (If both you and your spouse are younger an FHA reverse mortgage is out. If a spouse is younger then it may be necessary to create a trust.)

*What is the value of the property today? Given what has happened to condos in Florida you need to be certain the property really has a $400,000 fair market value.

*What are the costs and fees required to get the financing you want?

As the expression goes, it’s now time to go forth and shop around.

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One Response to “Can I Get A Reverse Mortgage For My Condo?”

  1. Yvette LeGrand Says:

    The borrowers’ specific age is very important here. The amount a senior can borrow is more or less on a sliding scale that is age (and interest rate) driven. A 65 yr old person may be able to borrow about 50% of the value of their home, while an 85 yr old may be able to borrow about 70% of the property value. Not only have values dropped recently, but closing costs in Florida are higher than in many other states.

    Also, if the property is worth around $400,000, they will certainly be pushing or exceeding the HUD limits in their area. However, pending congressional legislation may provide some relief it if raises the lending limit in their county.