Top 3 Questions About Reverse Mortgages

by | Nov 11, 2016 | Business

The HECM or home equity conversion mortgage is the Federal Housing Authority’s reverse mortgage plan that allows users to withdraw some of their home equity. The home equity conversion mortgage is a safe program that may provide seniors greater financial security. Most elderly individuals utilize it to supplement Social Security, meet any unexpected medical costs, do home improvements, and much more. It’s wise to become more familiar with reverse mortgages, and determine if it’s right for you!

What’s a reverse mortgage?

Reverse mortgages are special types of home loans which allow users to convert a part of their home equity to cash. The equity that one built over years of making mortgage payments may now be paid to you. However, unlike traditional home equity loans or second mortgages, HECM borrowers don’t need to pay back the home equity conversion mortgage loan until borrowers no longer utilize the house as their main residence or do not meet all of the obligations of their mortgage. You can also use a home equity conversion mortgage to buy the main residence if you have the ability to use money on-hand to pay the difference between proceeds from the HECM and sales price, in addition to closing costs for the home you’re buying.

Am I able to qualify for FHA’s home equity conversion mortgage reverse mortgage?

To qualify for a FHA home equity conversion mortgage, the Federal Housing Administration will require you to be a homeowner of age 62 and older, outright own your house, or possess a low mortgage balance which may be paid off during closing with proceeds from reverse loan proceeds, have the monetary resources to pay continuous property charges–which include insurance and taxes–,and you have to reside in the residence. You must also receive consumer details free or at low cost from an HECM counselor or reverse mortgage expert before receiving your loan.

Am I able to apply for a home equity conversion mortgage even if I didn’t purchase my current home using Federal Housing Administration mortgage insurance?

Absolutely. You might apply for a home equity conversion mortgage regardless of whether you purchased your house using an FHA-insured mortgage or not.

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