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Reverse Mortgage Appraisal

Reverse Mortgage Appraisal Requirements

An appraisal is a requirement on all reverse mortgage loans.

The lender is the one who is required to order the appraisal through an Appraisal Management Company (AMC).

AMC’s are third-party companies that assign the appraisal request to an appraiser, so that the lender and the appraiser do not have direct communication.

The reverse mortgage appraisal is required to be completed by an FHA approved appraiser.

The appraisal is required to be and inside and outside inspection. You might even see the appraiser check electrical lights, flush toilets and looks for termite and mold clues.

The appraiser is not conducting a full inspection, but it is more than a standard appraisal you might have been through on a previous refinance.

Once the appraisal is completed and received then the homeowner is offered the right to receive a copy via email or mail. The homeowner can also waive their right to receive their reverse mortgage appraisal.

Please know that all reverse mortgage appraisals are sent to HUD for review once they have been received.

Upon review HUD can require a second appraisal to be completed of which the lower value of the two appraisals will be used for reverse mortgage loan purposes 🙂

Reverse Mortgage Appraisal Guidelines

Appraisers have FHA guidelines to follow when appraising a property for a reverse mortgage, but there are also local city, county and state guidelines that might apply as well.

First and foremost the appraiser needs to confirm that the property meets HUD’s minimum standards.

A few things that might influence if your property meets reverse mortgage appraisal guidelines.

  • Do you have any repairs needed, or incomplete construction or remodeling work?
  • Do you have any chipped or peeling paint on the exterior of the house?
  • Do you have smoke detectors?
  • Do you have a carbon monoxide detector located in the hallways to the bedrooms and on each floor of your home?
  • Make sure your crawl space and/or attic is available for inspection
  • Do you have any visible termite damage?
  • Do you have any visible mold or water damage that might need further inspection?

These are a few reverse mortgage appraisal guidelines that can affect if your property meets HUD’s minimum requirement.

We encourage you to contact a reverse mortgage advisor from our list if you have any further questions about your property.

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Reverse Mortgage Appraisal Problems

In a situation where the appraisal listed a problem on your reverse mortgage appraisal what happens next?

It really depends on the type of problem that was listed, but generally speaking all homeowners have the ability to fix or remedy the problem, so they can continue and obtain their reverse mortgage.

If it is a structural or safety hazard then the lender will most likely require the repair to be completed before the reverse mortgage can be completed.

What are some reverse mortgage appraisal problems that can lead to repairs being needed now rather than later?

  • No railing on stairs or steps
  • Foundation issues
  • Pool that is drained and exposed with not guard railing
  • Bars on windows without safety release latches

On the other hand there are problems that can be fixed after the reverse mortgage funds.

The lender will create a “repair set-aside,” which will set-aside 1.5x the amount that it will cost to fix the issue. The loan will be allowed to fund and the homeowner will have 6 months to complete the required repairs. Once complete the homeowner will have the repair set-aside money released back to them.

What are some reverse mortgage appraisal problems that can lead to repairs being needed now rather than later?

  • Peeling or chipped paint
  • Toilet is broken
  • Backyard shed needs repair
  • Most often anything that are just cosmetic…

With the help from a reverse mortgage advisor these reverse mortgage appraisal problems can be remedied, so that you can still obtain your reverse mortgage.

Reverse Mortgage Appraisal Fee

The reverse mortgage appraisal fee can either be paid by the homeowner out-of-pocket, or it can be financed in the loan closing costs.

The appraisal fee can depend on a few things.

  • Properties in unique and rural environments
  • The size and square footage of the home and lot
  • Dwelling type: single family, multi-family, condo, or manufactured

Keep in mind that if a second appraisal is needed after the first appraisal is reviewed by HUD then that would also need to be paid by the homeowner or financed through the reverse mortgage loan.

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