Items you will need
- Income documents
- Deed to home
Reverse mortgages are home loans for seniors aged 62 and older. These home loans are designed to help seniors tap into the equity in their homes without the burden of a monthly payment. Reverse mortgages can be a beneficial plan for those consumers on fixed incomes. While these loans were historically designed for primary residences only, seniors can now take them out on second homes as well.
Make sure you own the second home free and clear. This means that there is no home loan outstanding on the property. The same holds true for reverse mortgages on primary residences.
Use the link listed in Resources to find an FHA-approved lender in your geographic area. While it's not required to use an government HECM (Home Equity Conversion Mortgage), these loans are relatively safe and federally insured.
Make sure the lender you choose offers reverse mortgages on second homes. One of the main lenders--Bank of America--does indeed offer these loans. However, some smaller, regional banks and credit unions do not offer this service. You must ask before submitting a loan application.
Provide the lender with all the documents listed in the "Things You'll Need" section. You can choose from three options: receive a lump-sum payment, a monthly stipend, or a combination of the two. The monthly stipend option is best for borrowers who struggle with fiscal responsibility.
Review the fees on the reverse mortgages. The fees on reverse mortgages on primary residences are already quite high, and if you choose a reverse mortgage on a second home, you may need to pay extra in interest or fees for the service. It's important to remember that all fees are collected when the mortgage comes due--either when the borrower dies or sells the home.