Q: My mother is 80 years old and lives in San Antonio, Texas. Her home is approximately 50 years old.
The house needs some serious remodeling. It needs to be leveled and the beams from the roof poking into one of her bedrooms. She is still working but wants to retire.
Are there any programs that will help her secure a loan to fix these badly needed repairs? She doesn’t have much money, and although my father is a veteran, they are divorced and I don’t think there’s any available assistance there.
I’d hate to see my mother move from the property. She really envisions staying there in retirement.
A: Your mother has three options in this situation: she can apply for a reverse mortgage, secure a 203k loan from the FHA, or she can sell the property.
A reverse mortgage permits homeowners who are at least 62 years of age to borrow against the equity in their homes without having to sell, sign over the title, or take on a new monthly payment.
The reverse mortgage is so named because the payment stream is inverted. In other words, the lender makes payments to you, and the balance and interest is due when you sell the home, move from it permanently (into a nursing home, for example), or pass away.
Your email doesn’t say if our mother’s home is already paid off, but if so, a reverse mortgage could be a viable option – if she can get one. Unfortunately, some of the biggest reverse mortgage lenders have stopped making reverse mortgage loans, due to a higher than expected level of defaults. In the past year, both Bank of America and Wells Fargo announced they would no longer do reverse mortgages.
Your mother might qualify for a reverse mortgage, but be unable to find a lender who can provide one to her. For more information, she should speak with a HUD-certified housing counselor. You can get more information on this page: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmlist
A second option for your mother is an FHA 203k loan, which is specifically designed for properties that need repair or renovation.
A lender will give you enough cash to fix your home, and base the amount on how much the repairs will cost and what the property will be worth once the work is complete.
There are a number of eligibility restrictions, including income requirements, but you can learn more on the FHA’s website: http://www.fhainfo.com/fha203k.htm .
While your mom wants to stay in her home, if these options don’t work it may not be financially viable. That’s why the final option for your mother is to sell the property, unburdening her of the need to engage in time consuming and costly repairs.
You can help her understand that if the other options aren’t available, moving will be a good choice. If she wants to know how much her home is worth in its current condition, you should talk to a local real estate agent who works frequently in the area. The agent should be able to provide you with sales prices of comparable homes in the area.
As your mother through the process, you and she might want to sit down with a good and reputable mortgage lender or broker to discuss options that may available to you. Early in the process, you might find out that some of your options might be more limited than expected or you might be surprised to find out that there are other options available to your mom.
Whichever option you select, I wish you and your mother the best of luck!
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