What is it?
A reverse mortgage allows you to access a portion of the equity in your home to obtain *tax-free cash without having to make monthly loan payments.
This national program is safe and is Government-Insured by the Federal Housing Administration (FHA), a division of the Department of Housing and Urban Development (HUD).
The HECM program was signed into law as a national program in 1988 and since its inception has helped hundreds of thousands of homeowners safely access the equity in their homes, helping them better enjoy their retirement years.
Some key requirements are:
- Be at least 62 years of age or older
- Live in your home as your primary residence
- Live in a single family home, two to four-unit owner-occupied home, townhouse, approved condominium unit, or certain manufactured homes
You must also meet the following conditions:
- Attend a HUD-approved counseling session
- Continue to pay property taxes and homeowners insurance
Recommended Reading...
Trusted Consumer Websites
Required Counseling
Mandatory counseling is one of the first steps which may take place by either phone or in person. The role of the counseling agency is to review your unique financial situations during this private session and explore any alternatives that may be available, such as selling your home and downsizing, available city or state grants, or other alternatives that may be available to you.
Although not a qualification of the loan, counselors are now required to ask potential borrowers about income, assets, debts, and monthly living expenses in order to perform a budget analysis. Once you have completed this session you will be provided a counseling certificate which you will need to sign and deliver to your lender of choice.
As a lender we must also give you a list of no less than 10 counseling agencies to choose from, 5 of which are mandated by the FHA and include the National Council on Aging.
Only after a lender receives an application and signed counseling certificate can we begin the processing of your loan. To find a HUD approved counseling agency near you, please continue to our counseling resource page »
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How much is Available?
Access our free online calculator to receive an instant quote on all federally-insured HECM programs.
Our calculator will provide a comparison of both Standard & Saver plans, including current interest rates and financed fees.
(The Standard Program offers borrowers the most money while the Saver Program offers the lowest closing costs)
You can even print amortization schedules and loan comparisons for immediate review.
Current Interest Rates
Fixed Rate - Cash Lump Sum: For those who plan to take the full draw of their funds in the beginning anyway, such as those paying off an existing mortgage or those planning to use the money immediately for other purposes, the fixed rate reverse mortgage will often give you thousands of dollars more than the monthly adjustable programs.
Recent improvements to the fixed rate option have greatly reduced the costs involved.
Adjustable Rate - Credit Line: Unlike Home Equity Lines of Credit offered by your local bank, the line of credit cannot be closed or frozen. The line also increases in availability each month based on the unused portion. Read more about our credit line options here »
Tenure Payment Plan: Sometimes referred to as an "annuity mortgage", the proceeds made available to you may be structured into monthly installments guaranteed for life.
History & Safeguards
During the 1970s, several private banks offered Reverse style loans. These helped seniors remain in their home by using their homes’ equity to pay off the mortgage. However, these early programs did not provide the protections that today’s loans do.
In 1987, the U.S. Department of Housing & Urban Development (HUD) established a trial program issuing government-insured Reversed Mortgage, and the Home Equity Conversion Mortgage was born (HECM). Since then, HECM loan has rapidly grown in popularity. These secure, government-insured loans have enabled hundreds of thousands of seniors to obtain cash to supplement their retirement income.
Non-Recourse Part of the HUD insurance guarantees that you and your children will never have to pay more than the property is worth in a bona-fide sale.
If you or your heirs attempt to sell the home and the sale nets less than the amount owed, you or your heirs will not be responsible to pay the portion that the sale did not cover. Learn more about non recourse loans »
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Is it right for you?
Reverse Mortgage loans are definitely not right for everyone. It may surprise you to hear a lender say this, but it is true.
Borrowers looking for a short term loan may be better suited for a different type of financing as the loan can require insurance, origination and third-party fees that must all be financed, making this loan impractical as a shorter term solution.
However, for those who wish to remain in their homes and need extra income or cash to do so, the Home Equity Conversion Mortgage may be exactly what you are looking for.
Educate yourself or family on the safeguards and laws with our free .PDF guides. We explain what it is, how it works, and provide answers to many frequently asked questions and common misconceptions.
You can also find current articles in our blog with articles, personal advise, and industry updates.
Our writer and CEO Michael G. Branson has over 32 years banking experience, has been instrumental in educating some of the largest banks on the nuances of the program and its benefits to mature homeowners.
For Home Purchase
Would you like to buy a new home but did not think you could qualify for a new mortgage based on today's underwriting guidelines? Did you think you would have to either put your plans on hold or use all your available assets to make your move? If you are 62 and over you should consider purchasing with the HECM for purchase program.
The Reverse Mortgage (HECM) for purchase is a federally-insured loan which allows Americans age 62 and over to; downsize, up size, move closer to family and friends, live in homes more suitable for their needs, or move to communities with activities more in line with their lifestyles, without having to purchase a home for all cash and with no monthly mortgage payment.
The HECM is a home loan that allows you to live in your home with no monthly payments and does not require you to pay the entire amount of the home in cash; giving you more liquidity for your individual use (you are responsible for taxes, insurance, upkeep and any homeowner’s dues). Let us show you how to purchase your next home and make no regular mortgage payments.
Recommended Links:
Working with a Realtor? If you are ready to make an offer on a property and need help explaining to Realtors and sellers how the purchase program works and how it will actually benefit all parties, please let us assist you. We are an experienced Purchase HECM lender and is here to assist you with the necessary steps for approval.
Blog's to follow:
ALLRMC - Allrmc.com/blog
RMD - ReverseMortgageDaily.com
RMA - ReverseMortgageAdvisers.com
CRB - CalculatedRiskBlog.com
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