What Is a Reverse Mortgage Appraisal?

Reverse mortgages allow homeowners age 62 and older to get a loan by tapping into their home equity. However, you must have an independent appraiser assess the proper🎉ty's value when applying for a reverse mortgage. The appraisal process involves determining the home's value by inspecting the home's condition.

The reverse mortgage appraisal is essential in helping the mortgage lender determine how much money to extend as a loan to the borrower. The independent appraisal💙 helps protect the borrower and lender by ensuring a ﷽fair assessment of the property.

How a Reverse Mortgage Appraisal Works

A 澳洲幸运5官方开奖结果体彩网:reverse mortgage is a type of loan that allows homeowners to access the equity accumulated in their home. They can receive the money as a lump sum, monthly payments, a 澳洲幸运5官方开奖结果体彩网:line of credit, or some combination. Borrowers (or their estate) don’t have to pay off the loan until they die, sell the home, or move out.

The 澳洲ꦿ幸运5官方开奖结果体彩网:Federal Hou﷽sing Administration (FHA), part of the United States Department of💖 Housing and Urban Development (HUD), insures reverse mortgages issued by FHA-approved lenders. These loans are formally known as 澳洲幸运5官方开𒐪奖结果体彩网:h෴ome equity conversion mortgages (HECMs).

Some private lenders offer their own versions of reverse mortgages as well. Those loans, often referred to as 澳洲幸运5官方开奖结果体彩网:proprietary reverse mortgages,๊ are not government-insured and can have different qualification requirements and lending limits.

In addition, some state and local agencies and nonprofit organizations offer 澳洲幸运5官方开奖结果体彩网:single-purpose reverse mortgages, typically for low- and moderate-income homeowners. As their name implies, the money must be used for a particular purpose, such as 澳洲幸运5官方开奖结果体彩网:home repairs or to pay property taxes.

A reverse mortgage 澳洲幸运5官方开奖结果体彩网:appraisal includes evaluating the home's age, locaꦍtion, square footage, and features, including the number of bathrooms and bedrooms. The process also involves comparing the home to similar homes in the neighborhood that have recently sold. The appraisal will highlight any deficiencies and needed repairs, particularly heꦺalth and safety concerns, such as electrical or structural issues.

From there, the appraiser creates a report for the 澳洲幸运5官方开奖结果体彩网:mortgage lender, who uses the evaluation when calculating the loan amount to the borrower. Discover what you need to k🌜now about the reverse mortgage appraisal process.

 Who Qualifies for a Reverse Mortgage?

To qualify for a 澳洲幸运5官方开奖结果体彩网:reverse mortgage insured by the FHA, you must be at least age 62. Among other requirements, you must also:

• Occupy the property as your principal residence
• Own the property outright or have paid off a “considerable” portion of any debt on it
• Have adequate financial resources to keep up with the home’s 澳洲幸运5官方开奖结果体彩网:property taxes, 澳洲幸运5官方开奖结果体彩网:insurance, and other fees

As part of the loan application process, the mortgage lender will review your 澳洲幸运5官方开奖结果体彩网:credit history and verify your income, assets, and monthly living expenses. It will also check whether you have paid your real estate taxes and homeowners insurance premiums on a timely basis. That also includes flood insurance if you have it.

What Homes Can Qualify for a Reverse Mortgage?

The home itself must also meet certain requirements. For example, it must be either a single-family home or a two- to four-unit home with one unit occupied by the borrower, a HUD-approved 澳洲幸运5官方开奖结果体彩网:condominium project, an individual condominium unit that meets the relevant FHA requirements, or a manufactured home that meets the requirements.

How Much Can You Borrow?

The amount that you will be able to borrow will depend on your age, current interest rates, and the appraised value of your home. The 2024 maximum FHA-insured HECM is $1,149,825.

Proprietary reverse mortgages with higher limits are also available and are commonly referred to as 澳洲幸运5官方开奖结果体彩网:jumbo reverse mortgages.

How the Appraisal Process Works

To determine how large of a loan you could be eligible for, your lender will require a professional appraisal of your home. For a government-insured 澳洲幸运5官方开奖结果体彩网:reverse mortgage, the lender must use an🤡 FHA-approved appr🔴aiser.  

Compare to Similar Homes

The appraiser will compare the home to similar homes in the area, including homes that have sold recently, to determine the home's market value. The appraiser will review homes in the area with features similar to those of the home being appraised. The appraiser also evaluates the neighborhood and will check the local 澳洲幸运5官方开奖结果体彩网:multiple listings service (MLS) to determine the value of homes that have recently sold when determining the 澳洲幸运5官方开奖结果体彩网:property value.

Review the Property Inside and Out

The appraisal process for 澳洲幸运5官方开奖结果体彩网:reverse mortgages follows the same steps as a typical home appraisal. The appraiser will evaluate the home's exterior, interior, and surrounding neighborhood. Areas of concern for an appraiser might be any structural and safety issues, such as plumbing and electrical. The appraiser may make measurements, take photographs, and review relevant legal documents.

Note Needed Repairs that Affect Property Value

The appraiser will also make note of any repairs or other work necessary to bring the home up to HUD’s minimum property standards. If substantial repairs are required, the homeowner may have to complete them before receiving the loan. If repairs cost less than 15% of the maximum claim amount—essentially, the most for which HUD would be responsible if the borrower defaults—the lender may issue the loan and allow the homeowner to complete the repairs afterward.

Appraisal Fee

While the appraiser works for the lender, the borrower has to pay their fee. That typically will be several hundred dollars. S𝔍ometimes, the lender or HUD may require a second appra🥃isal.

Appraisal Reporting

The appraiser should provide copies of their appraisal to the mortgage lender or financial institution, who will forward a copy to the homeowner. The 澳洲幸运5官方开奖结果体彩网:Equal Credit O𝔉pportunity Act (ECOA) requires creditors to automatically send a free copy of home appraisals and all other written valuations on the property after completion, regardless of whether credit is extended, denied, incomplete, or withdrawn.

If the homeowner disagrees with the appraisal, they can 澳洲幸运5官方开奖结果体彩网:challenge it by filing a request for reconsideration of value with the appraiser, along with comparables that they believe more fairly represent the home’s value. The appraiser is required to review that information, but it’s up ♏to th꧒em whether to make any changes as a result.   

The Bottom Line

澳洲幸运5官方开奖结果体彩网:Reverse mortgages are based, in part, on a home’s appraised value. If you’re applying for a reverse mortgage, 澳洲幸运5官方开奖结果体彩网:your lender will arrange for a professional home apprai💙sal. If you disagree with your home's appraisal value, you can dispute it.