A retired couple called me asking for a reverse mortgage. They didn’t realize that this is an FHA loan and that their condo complex had to be FHA approved. I explained to him that I would be glad to get his community approved with HUD, but that that could take 45-60 days, and then he would apply for the loan and have his money 30-45 days later. If this is urgent, this is not a good solution.
So I asked him why he thought he needed a reserve mortgage. He said that it was because he doesn’t make much income and that his wife needs money… interesting. Anyway, I asked how much they make and as it turns out they could get a traditional 30 year fixed mortgage of $100,000 and a payment of $350 per month. Which with $1500 per month they could qualify for. The reverse mortgage would not have payments but would have added $6200 to the mortgage balance every year. He also could have his money in 30 days instead of 120 days. Win win. Cheaper and Easier – we love it.
Reverse mortgages are good for some people but not all people, and yes, if you want an FHA loan on your condo, the condo community and all its aspects have to be approved by HUD, which oversees the FHA loan program.