Housing has become extremely costly in the last few years. Especially in places like California. For quite a few Americans owning a mobile or manufactured home makes good financial sense. Plus, the mobile homes built these days are quite stunning and the quality has become top notch. According to ManufacturedHousing.org, as many as 22 million Americans live in manufactured housing or mobile homes. For older homeowners aged 62 plus this begs the questions; Can you get a reverse mortgage on a mobile home? The quick and easy answer is, “yes”, but there are quite a few variables that determine your home’s eligibility for a reverse mortgage loan.
Manufactured Home vs Mobile Home vs Modular Home
Sometimes homeowners that have a manufactured home will inadvertently misclassify their manufactured home as either a mobile home or modular home. It makes sense, all of these are built in a centralized location and shipped to their owner’s final destination. So, it makes good sense to quickly differentiate between these home types.
What is a Mobile Home?
Technically, a mobile home is a factory built home that was constructed before June 15, 1976. These mobile homes are not eligible for the FHA / HUD insured reverse mortgage. Factory built housing did not have to adhere to HUD standards if they were built prior to June 15, 1976.
What is a Manufactured Home?
While the aforementioned mobile home built in 1975 may not look much different than one built in the second half of 1976, the main difference is that factory built homes built on or after June 15, 1976 do need to be built according to HUD standards. Hence, they will have a HUD plate or HUD tags sort of certifying that it’s a manufactured home vs a mobile home. Manufactured homes ARE eligible for the FHA insured reverse mortgages, but not for other proprietary reverse mortgages such as the reverse mortgage option for 55 year olds. These homes are typically built on a metal frame and often times delivered in one piece (depending on if it’s a single wide, double wide, triple wide, etc.). Also, they are virtually complete when they get trailered to their home site.
What is a Modular Home?
Often times I’ll hear homeowners that have manufactured homes misclassify their home as either a mobile home or modular home. A modular home is usually built in sections and then these sections are shipped to the home site to be assembled there. In terms of home lending, modular homes are treated more like site built or stick built homes that would be classified as an SFR. Most loans will work for a modular home just like a stick or site built home.
Want more info about reverse mortgage? Call us at (949) 492-2252 x704 or Email us at; [email protected].
Can You get a Reverse Mortgage Loan on a Mobile Home or Manufactured Home?
We’ve already determined that one type of mobile home that is not eligible are the ones built before June 15, 1976. So, if you’re mobile home or manufactured home is was built on June 15, 1976 or beyond, it may be eligible. It is worth noting that FHA guidelines permit financing of reverse mortgages on mobile homes built on or after June 15, 1976, BUT not every lender will lend on mobile homes. However, many lenders will lend on double wide mobile homes, but very few lend on single wide manufactured homes. Lifesource Mortgage is aligned with all the best reverse mortgage lenders and we can do single wide or double wide mobile homes (assuming they meet the FHA guidelines).
HUD / FHA Reverse Mortgage on A Mobile Home Eligibility Requirements:
- As previously noted, your mobile home should be built on June 15, 1976 or newer to get a reverse mortgage (however, some lenders have their own rules that state things like “the home must be built in 1990 or newer”)
- Your mobile home needs to be detitled and taxed as real estate (vs personal property) to be eligible for a reverse mortgage
- The tongue and axel need to be removed from your mobile or manufactured home
- Your mobile home needs to be secured to a permanent foundation
- The mobile home can only be in one location and can’t move from one piece of land to another
- Permanent utilities need to be hooked up to your manufactured home
- There should be some comparable mobile home sales nearby within the last 6 months
- The mobile home should have HUD tags to get a reverse mortgage
- HUD reverse mortgage rules also state the mobile home should have at least 400 square feet of living space
- Your home cannot be situated in a flood zone to get a reverse mortgage
- You’ll need to have an all weather roadway to the site
- The mobile home needs to be your primary residence and not an investment, rental, or second home to get a reverse mortgage
Want more info about reverse mortgage? Call us at (949) 492-2252 x704 or Email us at; [email protected].
What Is a Reverse Mortgage Loan?
A reverse mortgage is a very unique home loan for people aged 62 and older. Since a reverse mortgage is insured by FHA / HUD, it’s a very safe home loan for older homeowners. Reverse mortgage loans allow you to access a portion of the equity in your home and convert it into money you can actually use.
The best part about a reverse mortgage is that they don’t have a required monthly payment for as long as you live or for as long as you live in your mobile home (you can only do a reverse mortgage on your primary residence). However, it should be noted that since you still own the mobile home, you’ll need to maintain and pay property taxes, homeowner’s insurance, and HOA dues.
Another difference between an FHA insured reverse mortgage and a regular mortgage is that there is an equity requirement. Every age bucket from age 62 to 92 plus allows you to borrow a different percentage of your home’s value. Keep in mind that this can change based on interest rates on any given week. At age 62 you can borrow about 52% of the appraised value. At age 70 a reverse mortgage allows you to borrow about 57%. You can access about 64% of your home equity at age 80 and finally at age 92 and older there is about 74% of your home’s value available. Again, the percentage changes with EVERY passing year with a reverse mortgage, but we didn’t want to ramble on for 30 different and separate age buckets.
Benefits of a Reverse Mortgage
The first thing that happens with a reverse loan is that it pays off any existing loans you may have against your manufactured home thereby eliminating your mortgage payment.
Here is a benefit list:
- A reverse mortgage eliminates your mortgage payment (if applicable)
- Reverse mortgages also allow you to use the funds however you like
- The reverse mortgage has multiple pay out options for any funds left over after paying off your existing mortgage loans / liens (like a lump sum payout (in some cases 2 lump sum payouts), a line of credit, or monthly payments sent to YOU instead of vice versa)
- You still own your home when you do a reverse mortgage, just like if you have a regular loan
- You can still leave your mobile home or manufactured home to your kids or heirs
- You don’t have to pay income taxes on any funds you receive
- A reverse mortgage is a non recourse loan (means that you or your heirs will never be on the hook for a debt greater than the value of the home or that no other assets can be used to pay off the loan)
- When your heirs inherit your mobile home after you pass away, they don’t have to stress out about making a mortgage payment while they settle your affairs (whereas the servicer of a regular mortgage wants to receive monthly payments or they will begin a foreclosure process)
Want more info about reverse mortgage? Call us at (949) 492-2252 x704 or Email us at; [email protected].
Reverse Mortgage Application Process with LifeSource Reverse Mortgage:
The reverse mortgage process is pretty much the same with every lender or broker. Also, the process is virtually the same in every state. However some states have unique requirements. For example, the California Reverse Mortgage Application Process is slightly different than in other states. There are other states that have slightly different processes, but none of them are painfully different.
So here are the five basic steps to getting a reverse loan:
- Educate yourself about the reverse mortgage program. Look at you go! If you’ve read this far, you’ve already started doing that. Talk to a reverse mortgage professional. They will educate you in terms of the numbers, perform some due diligence on home values and the likelihood of it appraising high enough to get the reverse mortgage done, and answer any questions you may have. Make sure you ask the loan officer how many reverse mortgage loans they’ve done. I’ve done a lot. I’ve also encountered some loan officers that have done one or two here and there, but the doesn’t make them an expert.
- FHA Safeguard – FHA requires you to do counseling. It’s nothing crazy, but they want you to meet with someone that knows about reverse mortgages, but are not trying to sell you on it. Obviously, a loan officer WANTS you to do it. The counselor just goes over the facts (like how you’ll still own the mobile home, how it has to be primary residence, how you need to pay taxes/insurance, etc.).
- Loan Processing – Once you’ve educated yourself about reverse mortgages and done the counseling, it’s time to process the file. You’ll do a reverse mortgage application, sign it, send in income documentation etc. Our processors will order title, the appraisal, and much more to get your loan ready for underwriting.
- Underwriting – Once the processor has all of their work done and once the appraisal comes back, they will submit your reverse mortgage loan file to underwriting. Normally, the underwriting takes 1-2 business days and sometimes 2-4 business days during a times when volume is high. They will issue a conditional approval and then the loan processor will have a new task list to complete. There might possibly be something your loan officer will need from you.
- Funding – Now that the processor, loan officer, and borrower have satisfied all the conditions set forth in the reverse mortgage conditional approval, the lender can issue what’s called a “clear to close”. This basically just means the loan is fully approved and you can sign your final loan documents. When you sign your loan documents, you’ll have a 3 business day waiting period, then we can get your loan funded.
One thing to keep in mind after one year is that you may be able to redo the reverse mortgage. There has to be some sort of tangible benefit, otherwise FHA won’t allow it to happen. For example, sometimes home values increase enough to make it beneficial to refinance a reverse mortgage. Sometimes, FHA increases the max claim amount (industry jargon referring to the maximum allowed appraised value). Also, interest rates change and historically FHA has adjusted the ongoing MIP for reverse mortgages. So, stay in touch with us and revisit after a year has passed.
“Can You Get a Reverse Mortgage on a Mobile Home?” written by LifeSource Mortgage.
Want more info about reverse mortgage? Call us at (949) 492-2252 x704 or Email us at; [email protected].
