Find Out More About HECM Reverse Mortgage Loans

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What is a Reverse Mortgage ???

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.  However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.  You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

Why The Reverse Mortgage ???

We live in an age where senior homeowners can take advantage of the built up equity in their homes to live happier lives, and successfully face the economic hardships of the 21st century. Initially, reverse mortgages had been designed for seniors who struggled with financial issues. In this day and age reverse mortgages have become a trend for seniors who want access to the equity in their home so they can fulfill their financial goals and needs. Here are 5 of some of the main benefits when doing a HECM federally insured reverse mortgage:

  1. Various payout methods: there are several methods by which you can get paid the money from your reverse mortgage. These include but are not limited to:
    • A monthly tenure payment
    • A line of credit
    • A lump sum payment
    • There is also a way to diversify your proceeds that you may have access to, but you will need to speak with a licensed loan originator to go over the details.
  2. Qualifying for the reverse mortgage program is not dependent upon your credit score; however, as of April 27, 2015, you are required to pass the financial assessment. There are many guidelines attached to this new financial assessment, which are important for you to discuss with a licensed loan originator.
  3. Federally insured: Reverse mortgages are insured by the Federal Housing Administration, in turn making them a non-recourse loan.
  4. No Repayment Required: According to a recent statement issued by the Consumer Financial Protection Bureau, you are not required to repay the proceeds that you use with your reverse mortgage, unless you choose to sell your home or decide to have another location as your primary residence. The reverse mortgage is a loan, therefore the proceeds are not considered income, making them tax free.
  5. Retain the title of your home: With the reverse mortgage program, the homeowner does not lose the title on his or her home.

HUD Counseling

Prior to obtaining a reverse mortgage, you are required you to have a private counseling session with one of their HUD approved counselors. Your loan originator is required to give you a list of several different HUD approved counselors. You have the option to either do your HUD counseling over the phone, or you can go to a local office for a one-on-one counseling session. After your HUD counseling is completed, you can then make a decision on which lender is going to be the best fit for you.

Tips on Finding a Reverse Mortgage Lender

Creating a fresh income stream while reducing your current mortgage are two of the main reasons to consider a reverse mortgage. It is important to understand that some loan originators are more experienced than others. When picking a lender, make sure that your loan originator has enough experience to discuss all the options that could potentially benefit you. Every lender’s fees and interest rates vary, so it is crucial to thoroughly compare those when choosing a lender.