Finally, a Reverse Mortgage With Reasonable Upfront Costs
A financially comfortable retirement is no longer a given for many homeowners. The worldwide economic downturn led many Americans into crisis, facing foreclosures, job layoffs and investment portfolios with little or no value. Thankfully, for homeowners over 62, there is a way to turn equity into cash.
Many have heard the term “reverse mortgage,” but what exactly this program involves has been a mystery. The Federal Housing Administration (FHA) announced their new reverse mortgage in the fall of 2010. It is called the HECM Saver. HECM stands for Home Equity Conversion Mortgage and has the financial backing of the FHA.
HECM Saver is worth a good look for homeowners considering a reverse mortgage. Its main benefit is far lower upfront costs than offered by most other lenders. Those who have already reaped the benefits can attest to the savings.
Who is eligible for HECM? The answer is simple. Any person, who is over 62, owns her or his house outright, and lives full time in their home, is a great candidate. HECM financial counselors are available to provide complete information and borrowers must contact one before the loan can be final. A toll-free number, 800-569-4287 puts the applicant in touch with a counselor.
A single family house or a property of up to four residences can be considered for a HECM loan. With a multiple property the person applying for the loan needs to live in one unit full-time. There are also categories of mobile homes and condos that meet the qualifications. The HECM counselor can provide all of these details.
The "magic" of a reverse mortgage is that you, the homeowner, are receiving payments for living in your house. This is the main difference between this program and taking out another mortgage or a line of credit against the equity. Naturally there are regulations that govern this program.
Just as you have always done, insurance, utilities and taxes are yours to pay. The home that is the security for the loan must be kept up in appearance and function. It needs to be free from citations for health or safety issues. Any deed restrictions or homeowners’ association fees are also the responsibility of the owner to meet.
An easy way to get a ballpark idea of how much you might borrow is to know the appraised value of the property and what current loan interest rates are at the time of applying. With this program, age is a benefit. The more years under your belt, the lower the interest rates, owning a nice home in a good neighborhood, all of these add up to additional borrowing power for you.
Finally, like any loan, there will come a time when the debt has to be repaid. The loan will come due when the borrower dies or the property is sold. If the owner moves or does not live in the home for 12 consecutive months, full payment is also expected. Not paying insurance premiums or property taxes also causes payments to end and the full loan balance will be due. The HECM Saver can be a good choice for many homeowners facing serious cash flow issues. The best bet is to talk with a financial advisor or HECM counselor and find out if a reverse mortgage works for you.
