Mortgage Q & A: Owner Occupancy and Reverse Mortgages

Q: My husband recently inherited his parents' lakeside vacation home. We would like to spend summers there, but are worried about the occupancy requirements for the reverse mortgage on our primary home. Will we get into trouble with our mortgage lender if we live in our vacation home for three months of the year?  We also like to travel, and may be away from our home for another month or so each year.

A: The Department of Housing and Urban Development (HUD), insures most reverse-mortgage loans through its FHA Home Equity Conversion Mortgage (HECM) program. Although HUD owner-occupancy regulations require reverse-mortgage borrowers to occupy a HECM-financed home as their primary residence, there is plenty of leeway for using your vacation home and for traveling.

HUD/HECM requirements do not allow reverse-mortgage borrowers to be away from their homes for more than twelve consecutive months. Your mortgage lender or mortgage servicing company is required to certify your occupancy of your reverse-mortgaged home annually.

While reverse-mortgage owner occupancy guidelines allow for homeowners' extended absences, it's best to discuss long-term travel plans with the company that services your reverse mortgage. It's important to verify that your mortgage lender does not have different (and potentially more strict) occupancy requirements.

Your reverse-mortgage terms also require you to maintain your home while you're away; otherwise your home could be mistakenly considered abandoned and cause your reverse-mortgage lender to call your loan due and payable. Before leaving your primary residence for a prolonged absence, it's a good idea to arrange for someone to check on your home and to have your mail forwarded. This can prevent problems with missed correspondence from your reverse mortgage lender or servicer.

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