Multifamily homes

Multi-family homes are known by lots of different names; most often they're duplexes, triplexes, or fourplexes (don't get us started on the grammatical incongruousness of "fourplex"). For those savvy real estate investors who purchased a multi-family residence, don't feel left out. As long as you live in one of the units full time, your property may be eligible. What's even better is that there's no rule as to how long you have to live at your residence before you take out a reverse mortgage. If you're thinking of getting a reverse mortgage on a multi-family property that you use as an income source, get packing and move into one of those units. Just make sure it's someplace you can see yourself living for several years down the road.

Of course, "slum lords" need not apply. Your multi-family home must be up to FHA/HUD standards in every way. Every unit must be safe and sound, and every unit is subject to inspection. The only major caveat to the multi-family home is that it can't have more than four units. The good news is that your entire property — every unit — is calculated in the loan value. It wouldn't make sense to treat it like a condo since you own the whole place. Not every loan product has multi-family homes under its mortgage umbrella, so talk to your originator and counselor about your options.

Not to dissuade you from a reverse mortgage altogether, but if you own a multi-family residence and you're hurting for ready cash, you may be better off either selling the property or raising the rent on the other units — just make sure you're asking a fair and reasonable rent (fair for you and the tenant).

AM* Reverse mortgages are designed to last about seven years on average. Will you still want to be responsible for those other units in seven years or more? Of course, you're free to end your loan by selling your home at any time, but selling too early can make your loan more expensive in the long run. Or short run, as the case may be.

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