Can I Get a Reverse Mortgage on a Manufactured Home?
Navigate the specific considerations for obtaining a reverse mortgage on a manufactured home. Understand the unique property and eligibility criteria.
A reverse mortgage is a financial tool allowing homeowners, typically seniors, to convert a portion of their home equity into cash without needing to make monthly mortgage payments. This type of loan becomes due and payable when the last borrower permanently leaves the home, sells it, or passes away. While commonly associated with traditional site-built houses, manufactured homes can qualify for a reverse mortgage, though they face specific requirements. Understanding these considerations is important for manufactured home owners.
Key Eligibility Factors for Any Home
Homeowners considering a reverse mortgage must meet several eligibility criteria. For a Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage insured by the Federal Housing Administration (FHA), the youngest borrower on the loan must be at least 62 years old. Some proprietary reverse mortgage products offered by private lenders may have a lower age requirement, allowing borrowers as young as 55 to qualify.
The home itself must be the borrower’s primary residence, meaning it is where they live for the majority of the year. Borrowers must have substantial equity in their home, typically enough to pay off any existing mortgage at closing. This ensures the loan proceeds can cover any outstanding debt and closing costs.
A mandatory counseling session with a HUD-approved independent counselor is a required step for all reverse mortgage applicants. This counseling helps individuals understand the terms, financial implications, and alternatives to a reverse mortgage. Additionally, borrowers undergo a financial assessment to confirm their ability to meet ongoing property obligations, such as property taxes, homeowner’s insurance, and home maintenance.
Additional Requirements for Manufactured Homes
Manufactured homes must satisfy specific criteria to qualify for a reverse mortgage. The manufactured home must have been built after June 15, 1976, and conform to the HUD Manufactured Home Construction and Safety Standards (HUD Code). Compliance is evidenced by permanently affixed HUD certification labels and a data plate within the home.
The home must be permanently affixed to a foundation that meets FHA guidelines, which means it cannot be on wheels or a temporary support system. This permanent foundation must be engineered to withstand weather conditions and requires certification from a licensed engineer to confirm compliance with HUD’s Permanent Foundation Guide for Manufactured Homes.
The manufactured home must be legally classified and taxed as real property, not personal property like a vehicle. If the home is currently titled as personal property, a “de-titling” process may be necessary to convert it to real property status.
Lenders also consider the home’s condition and its original placement. The manufactured home must be in good condition and meet specific appraisal standards for structural integrity and safety. Some lenders may prefer or require double-wide units, and the home’s floor area must be at least 400 square feet. The home must be located on land owned by the borrower; homes on leased land, such as those in mobile home parks, do not qualify for reverse mortgages due to the ownership structure.
Navigating the Application for a Manufactured Home
Applying for a reverse mortgage on a manufactured home involves a specific process. The first step involves identifying lenders with experience in originating reverse mortgages for manufactured homes. Lenders experienced with manufactured homes are better equipped to navigate the specialized requirements.
Prospective borrowers will need to gather specific documentation during the application phase. This includes proof of HUD certification, such as the HUD labels and data plate, which verify the home’s construction standards. A permanent foundation certification is also required to confirm the foundation’s compliance with FHA standards. Evidence of the home’s real property title conversion, if applicable, will be necessary to demonstrate it is no longer considered personal property.
The appraisal process for a manufactured home reverse mortgage includes additional scrutiny. The appraiser will not only assess the home’s value but also verify its adherence to HUD construction and permanent foundation requirements. Appraisers must identify comparable sales of other manufactured homes in the area that meet similar criteria. Once all documentation and appraisals are complete and approved, the loan proceeds are disbursed as a lump sum, a line of credit, monthly payments, or a combination thereof.