Dear Senior Living Adviser,
We own two homes. Do we qualify for a reverse mortgage?
— Ray Ranch
If you meet the parameters for a home equity conversion mortgage (HECM) you can get one on your primary residence. Here are the qualifications as spelled out on the Department of Housing and Urban Development’s frequently asked questions page:
To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, have the financial resources to pay ongoing property charges, including taxes and insurance, and you must live in the home.
You’re also required to get counseling for a reverse mortgage from a HUD-approved housing counseling agency. The counseling will help you understand the costs and different payment options available for the money you receive from the reverse mortgage. Matching your goals for the money with the payment option is going to be the best move.
If you’re snowbirds and splitting time between summer and winter homes, you want to be certain that the time spent in the second home doesn’t change which home is your primary residence, violating the condition that your primary residence must be the home that has the reverse mortgage.
Not living in the home with the reverse mortgage as your primary residence for a period of time, typically 12 consecutive months, triggers the reverse mortgage coming due. If the second home is an investment property that you don’t reside in, then that shouldn’t be a concern.
Ask the adviser
To ask a question of Dr. Don, go to the “Ask the Experts” page and select one of these topics: “Senior Living,” “Financing a home,” “Saving & Investing” or “Money.” Read more Dr. Don columns for additional personal finance advice.