| Can I Do A Reverse Mortgage If My Home Needs Repairs? |
| Articles - Mortgage |
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What do you do if know your home needs repairs, but you need the money from your loan to do them?
What do you do if know your home needs repairs, but you need the money from your loan to do them? Under the traditional loan requirements, you need to fix the deficient aspects of the property and then you can do a loan. What makes a reverse mortgage unique is the ability to do a loan first and then, after it closes, do the repairs. This allows you to get the money needed to do the repairs from the equity of your home. Some of the more common scenarios are: 1. Decks covered with indoor outdoor carpet (the stuff that looks like fake grass), causing the deck board to rot. 2. The southern side of the home is peeling paint due to all the sun exposure. 3. Softer, squishy areas around the tub and toilet, indicating dry rot. The required repairs for these problems can be completed after the loan is closed. In fact, any repairs that do not involve safety or health concerns can be done after you loan closes. Your property not having adequate water is an example of a repair that can't wait, but roofing and dry rot repairs are common and should not be a problem. You say you want to know how the lender ensures that the repairs get done. Well thank you for asking. A bid from a licensed contractor will be required, and then add 50% to that bid to cover any miscalculation or budget overages that might come up. The money for repairs, plus the extra amount, is held back in an escrow account called an "escrow holdback". Upon the repairs being completed the lender will pay the contractor, and you will be refunded any difference. What if you want to do the repairs yourself? You can. You will still need to have the contractor bids though, and the escrow hold back is still required. The lender is looking for a professional estimate of what the repairs will cost. A summary of what you learned: You can do the repairs with the proceeds of your loan, and that makes it unique when compared to other loans. Even if you want to do the repairs yourself, the escrow holdback will be required. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. One of the first steps in knowing what you can do, is knowing how much you qualify for. Use our free reverse mortgage calculator to quickly estimate how much money is available to you. There's a lot of reverse mortgage information that will help you become educated before you make your decision. |