I am trying to do a reverse mortgage, but I am being tols that there is a resale restriction on my home. What does this mean?
Dear Bill, in year 2000 I bought a house in a redeveloping area, the house is only eight years old. Since my health is not the same, in my later years I have decided to do a reverse mortgage. Now I am being told that there was a resale restriction agreement because I was a first time buyer under a county redvelopment program. Wellsfargo has offered to repay them their money, there is now where it says they can't be repaid. My question is, if they are paid back, doesn't that put them out of the loan, and become solely Wellsfargo's. Then the house can be sold in a different manner? Need your help. The houses around me are going far 3 and 4 hundred thousand dollars my house cost 105000.00 at the time of sale. with a second loan that is paid back living in the house brings the total amount 135000.00. Thanks for taking the time to listen to my problem.
Depending on the state that you reside in, the Resale Restriction Agreement restricts the use and sale of the home for 30 to 55 years. These types of agreements are put in place to make sure that certain properties remain affordable. The effect of the resale restriction is that it precludes you from earning market rate returns on your home. Even in the scenario that you repay the loan, you are still limited to the type of buyers that you may sell or transfer the home to. Please examine your agreement more carefully to see what type of restrictions apply on your home.
Resale restrictions are typical when you buy homes at below market value. Below market rate homes sell at a significant discount from the market-rate sales price. The affordability of the units is made possible by your agreement to certain restrictions specific to the resale price of the unit in the event you decide to sell. The terms of the Resale Restriction Agreement usually include:
- Limits on resale price for stipulated period of time.
- Requirement that the buyer you resell to must be an eligible moderate-income household. This ensures that the next home buyer will benefit as you did.
- The City's Right of First Refusal when you resell.
- Requirement to occupy the unit as your principal residence.
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