I’m going through a company AIG reverse mortgage, however I was told to replace 2 wall furnaces first but I don’t have the $2500.00 to get it done the company told me I’m responsible before we start the reverse mortgage, is this true? Please Help!

Hi Lori,

AIG would be correct in that HUD requires a permanent heat source in the home to be functioning in all but just a few zip codes in the United States in order to close a reverse mortgage. HOWEVER, no, it does not have to be functioning before you can even start the process and to be honest with you, I would think you would want to see that you qualified for the loan before you would want 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 do you get the repairs done first, and how do you do that if you don’t have the $2500.00 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 would have you go to our website and first run your numbers on our calculator to see if the reverse mortgage works for you, especially knowing that you will need $2500 right away to pay for the heater repairs. If the numbers you see will work for you, we would check the sales of similar homes in your area to determine a 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, but we can usually get a good idea of the value (assuming there are recent sales of similar homes in your area).

Then the next thing that you would have to do, would be to complete your counseling if you have not already done so. 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 large 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 try 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, 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.

The reason I say “almost” is because we work with a couple of national companies who have contractors available to complete work knowing they will not get paid until the reverse mortgage is closed. 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 have to decide if you wish them to do the work or not based on their bids.

If you are satisfied with their quote and wish to proceed, then we order the appraisal. After the appraisal is done and the value is substantiated and you have loan approval, then you can authorize the work and the contractor agrees to allow you to pay them after the loan is closed.

It is not paid by us and we do not 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 getting their repairs completed so that they could get the reverse mortgage they needed but we always caution borrowers to do your homework and check local reviews.

This whole process that 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 and now there is not enough money in the loan to pay for the repairs.

If you want to see if this would work for you, please visit our calculator to see what you might be able to expect from a reverse mortgage on your home.

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