Can Snowbirds Have 2 Reverse Mortgages?

You can have only one reverse mortgage, but there are other ways to access equity

Fact checked by Timothy Li
Reviewed by Doretha Clemon

Reverse mortgages are limited to primary residences, and since you can have only one primary residence, it is not possible to have two reverse mortgages at the same time.

Reverse mortgages can be suitable for snowbirds who also are seniors. Many snowbirds have second homes in the Sun Belt, Hawaii, or Florida, so they have built up equity in two distinct properties. Since a reverse mortgage is an option for only one of those properties, there are alternatives such as home equity loans or cash-out refinance plan.

Key Takeaways

• Many snowbirds have equity in two homes: their primary residence and their vacation home. 
• A reverse mortgage can be a good way to access this equity, but you can only have one at a time. 
• Reverse mortgages can be taken out only on your primary residence, meaning the place where you spend the majority of the year.
• There are other ways of accessing the equity in your properties. These include a cash-out refinance or a home equity loan.

What Is a Reverse Mortgage?

A reverse mortgage is a special type of loan that is available to people who are 62 and older who own their own homes and have a considerable amount of equity in their properties. It allows retirees a way to borrow money against the value of their homes. The loan is advanced in a lump sum, as a fixed monthly payment, or as a line of credit.

There are three types of reverse mortgages. The most common is the home equity conversion mortgage (HECM). Under this program, the mortgage amount that you may borrow will be the lesser of:

1. The appraised value
2. The Federal Housing Administration (FHA) HECM limit of $970,800, or
3. The sales price (only applicable to HECM for Purchase). If you need to borrow more, you can look into a jumbo reverse mortgage, also called a proprietary reverse mortgage.

Reverse mortgages come due when the homeowner dies, moves away permanently, or sells their home.

Reverse Mortgages for Snowbirds

Many snowbirds choose to buy a second home in their vacation spot of choice, whether in Florida, Hawaii, or somewhere else warm and sunny. They also may have significant equity built up in their primary residence. It’s possible to use a reverse mortgage to access some of this money, giving them regular monthly payments, a lump sum, or a line of credit, in exchange for giving away the equity in their home.

However, residency rules for reverse mortgages state that the property on which you have the reverse mortgage must be your principal residence. This means you can’t be away from a property for more than six months and have a reverse mortgage on it.

This effectively bars snowbirds from taking out a reverse mortgage on their second home if they already have a reverse mortgage on their primary residence. However, if you have a significant amount of equity invested in your second home and want to access it, there are alternative ways of doing that. 

Important

If you have a second home and spend a lot of time there, be careful with the residency rules of reverse mortgages. If you are away from your primary residence for more than six months at a time, then your reverse mortgage lender can assume that you are in breach of the lending terms and may even start foreclosure proceedings. Make sure that you keep records, and respond quickly to requests (generally annual) to confirm where you are living.

Accessing Equity for Snowbirds

A reverse mortgage is not the only way to access the equity that you have built up in a property. In fact, reverse mortgages only make sense for a small proportion of senior homeowners. That’s because the high costs associated with reverse mortgages make other forms of borrowing more cost-efficient in the long term.

And unlike reverse mortgages, it’s possible to use these alternative sources of borrowing on two properties at once or to use them just in association with your vacation home. The alternatives include a:

• Cash-out Refinance: This option can help you access considerable equity in your home at one time. Keep in mind that you must make monthly payments to the lender if you take this route.
• Home Equity Loan or Home Equity Line of Credit (HELOC): You can access a great deal of equity in your home by taking out a HELOC. This option also requires regular monthly payments. But, there may be fewer associated fees, making this a much less expensive alternative to a reverse mortgage or cash-out refinance. Another benefit is that you can secure a HELOC with your primary or second (vacation) home—or both if you choose to do so.

Whichever option you take, make sure that you stick within the residency rules for your first reverse mortgage and plan for the long term. While taking equity out of your properties might be attractive in the short term, you should plan carefully to make sure that it doesn’t leave you short of money in the long term.

Can You Have Two Reverse Mortgages?

No, borrowers can only have one existing reverse mortgage at a time. However, borrowers who have paid off a reverse mortgage can get another reverse mortgage. And borrowers with an existing reverse mortgage can refinance the reverse mortgage to another one.

Does a Reverse Mortgage Have to Be on Your Primary Residence?

Yes, the residency rules for reverse mortgages state that you must spend the majority of the year in the property on which you have the reverse mortgage. If you are away for more than six months, your lender might say that you’ve broken the lending terms and may even start foreclosure proceedings.

Can I Use a Reverse Mortgage to Buy a Second Home?

Yes, but be careful. The fees and interest associated with a reverse mortgage mean that you may end up with a lot less money than you invested in your first home. Other ways of accessing your equity, including a cash-out refinance or a home equity loan, might make more sense in the long term.

The Bottom Line

Many snowbirds have equity in two homes: their primary residence and their vacation home. A reverse mortgage can be a good way to access this equity, but you can only have one at a time. Reverse mortgages can be taken out only on your primary residence, meaning the place where you spend the majority of the year.

There are other ways of accessing the equity in your properties, though. These include a cash-out refinance or a home equity loan.