Reverse Mortgages are increasingly becoming prevalent with seniors who currently have some sort of equity in their homes and would wish to supplement their incomes after retirement. The U.S Federal Government at the moment only insures the Home Equity Conversion Mortgage (HECM). However, this particular mortgage is only available to senior citizens in the US by an FHA approved lender.
So what really is the Home Equity Conversion Mortgage?
Reverse Mortage Loan Expert Bill Medley
This is basically a type of FHA-insured reverse mortgage. This particular type of mortgage makes it possible for seniors above the age of 62 to convert the equity that they have in their homes into ready cash that they can further use to supplement their income. The usual amount borrowed is normally based on the appraisal value of the home in question that is subject to limits from the FHA and also the age of the borrower. The funds that are offered are usually advanced against the actual value of the borrower’s home. With the HECM, interest usually accumulates on the loan balance. However, no payments need to be made not unless the home is sold, or the borrower passes away. When the borrower dies, the mortgage needs to be paid immediately. The borrower is also not subjected to credit checks since the home acts as security or collateral.
Home Equity Conversion Mortgage broke Down
In case you chose a private sponsor for your reverse mortgage, they may allow a higher borrowing amount and the costs might be lower as compared to the HECMs. However, you need to understand that the interest rates that accumulate from the HECM are significantly lower. Therefore, the economics of both the privately sponsored reverse mortgages and the HECMs will largely depend on the borrower’s life expectancy and how long they expect to own the home. The FHA usually insures the HECM loans, meaning that the borrower will not owe more than the value of the home in question in the case the home equity is exceeded by the loan.
To ensure that you qualify for the FHA HECMs, you will be required by the FHA first to be a home owner. You will need to be at least 62 years and be the rightful owner of the home. In case you have a low mortgage balance you might also be considered, however, the balance needs to be payable at the closing with the proceeds that you will acquire from the reverse loan you receive. You should also have the finances that will assist you to make ongoing property charges such us, property taxes, insurance and HOAs. The home will also need to be your primary residence. You will be required to receive a free counselling session with an HECM counsellor. In case you need information on how to go about this, you can get in touch with “America Reverse” and get your Free No Obligation Informational Guide.
The home equity loans are actually alternatives to the reverse mortgage. However, you need to understand that unlike the reverse mortgage, with the home equity loan you will be subject to credit checks. In addition, the home equity loan is prone to have lower costs as compared to an HECM, but a much higher interest rate.
If you are interested in getting more information about reverse mortgages or need assistance in getting one, fell free to contact us and get your Free No Obligation Informational Guide. At America Reverse, we pride ourselves in offering our clients with the best quality service. Contact us today! Check out what Bill Medley from the Righteous Brothers to say about reverse mortgages.
You’re not the first to be in such a position … We have assisted many individuals in your current situation.