I’m going through a company called AIG Reverse Mortgage.  However, I was told to replace 2 wall furnaces first, but I don’t have the $2,500.00 to get it done.  The company told me I was responsible before we started the reverse mortgage.  Is this true?  Please Help!

ARLO reverse mortgage help

AIG would be correct in that HUD requires a permanent heat source in the home to function in all but just a few zip codes in the United States to close a reverse mortgage.  HOWEVER, no, it does not have to be working before you can even start the process, and to be honest with you, you would want to see that you qualified for the loan before you would like to begin the repairs.

But then you still have your “chicken or the egg” scenario.  What do I mean by this?  Which comes first?  Do you find out if you qualify or get the repairs done first?  How do you do that if you don’t have the $2,500.00 to do the repairs in the first place?

That’s where working with a company like All Reverse comes in.  Please let me explain.

I suggest you go to our website and run your numbers on our calculator to see if the reverse mortgage works for you, especially since you will need $2500 immediately to pay for the heater repairs. If the numbers you see work for you, we will check the sales of similar homes in your area to determine the most likely value for your home.  

This is not an appraisal at this point, and the only thing that will be a value we can use for the home is an appraisal by an FHA-approved appraiser.  Still, we usually get a good idea of the value (assuming recent sales of similar homes in your area).

Appraisal Checklist Clipboard Factors Conditions Requirements

The next thing you would have to do would be complete your counseling if you still need to.  The counseling allows us to begin some processing on your behalf.

We don’t have to order an appraisal yet, so there won’t be any high costs at this point, but we do need to take a loan application and run credit to see if there is anything that would require a life expectancy set aside or would otherwise change the numbers you saw on the calculator.

Everything is subject to the appraised value, but we want to eliminate as many surprises as possible before you spend any money you don’t have to.  Once we know that all the credit and income information meet the requirements for your needs and that there are no other issues to stand in the way other than the heater, then we are almost ready to move forward with the appraisal.

I say “almost” because we work with several national companies with contractors available to complete work. We know they will not get paid until the reverse mortgage is closed, so we would have them contact you to set up a time to visit your home and prepare a bid for the work to be done.

They are not our affiliates; all we can do is introduce you, and you must decide based on their bids if you wish them to do the work.

Moving forward with approval

We order the appraisal if you are satisfied with their quote and wish to proceed.  After the assessment, the value is substantiated, and you have loan approval.  You can authorize the work, and the contractor agrees to allow you to pay them after closing the loan.

We do not pay it or get involved in the payment; that is between you and the contractor.  The contractors do not work for All Reverse, and we have no knowledge or control over which contractors the national company uses.

We encourage all borrowers to do their due diligence when selecting a contractor.  We have seen many borrowers use this type of solution to complete their repairs to get the reverse mortgage they needed, but we always caution borrowers to do their homework and check local reviews.

This whole process I have just laid out does take a little longer than a reverse mortgage that does not require repairs, so keep that in mind.

But you don’t make repairs before you know you have an approved loan; you don’t have to advance the funds to pay for those repairs, and therefore, you are not stuck with a contractor’s bill that is due only to find out later that the appraisal came in lower than you hoped.  There is not enough money in the loan to pay for the repairs.

If you want to see if this works for you, please visit our calculator to see what you can expect from a reverse mortgage on your home.

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