HECM or Home Equity Conversion Mortgage, which is commonly known as the reverse mortgage is one of those mortgage solutions that are designed for borrowers over the age of 62. These are federally insured loans that are truly a mortgage in reverse. These are an FHA’s reverse mortgage solutions that allow you to take out a portion of the equity in your home if your financial situation calls for it. In this way, borrower’s current monthly payment is eliminated and he is given an access to the available equity in his home or in some circumstances, to purchase a primary residence as well. As these reverse mortgage solutions are insured by the federal government so it is advisable that seniors interested in this kind of loan should apply for it through a Federal Housing Authority approved lender only.
Highlighting Some Terms Of HECM
• Furthermore, on availing HECM, you are not subjected to any monthly payments or fees instead you get a monthly cash payment until you don’t use the mortgaged home as your primary residence
• Over the time this reverse mortgage balance will grow. Since monthly payments have already been eliminated so the loan will yield an interest charge each month, which will be added to the balance of the loan
• In case the borrower dies or sells the property, the cash, interest and finance charges will be repaid through the equity in the home itself
• Once the debt is paid, any remaining proceeds after it will either be retained or left to the surviving family members. In no ways, your spouse or loved ones can be held responsible for this debt
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Eligibility Criteria For HECM
• Qualifying this type of financial product demands you to be at least 62 years old
• An eligible candidate should either own a property that is paid off or has substantial equity in the home or must be living in the property as a principal residence
• You should not be overdue with any federal debt and must have the finances to pay costs for your property, including taxes, insurance and associated fees
• The application process also requires you to attend official information session on HECM in order to make things clear to you in advance
• Properties that can get you these mortgage solutions are either single family property or if you are occupying one of the units of a multi-unit property, as well as, certain manufactured homes and approved condos
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The Factors That Decide The Amount Of Money You Will Get
• The monthly payment of the borrower will depend on the following:
# The amount of equity you have
# Your age
# The current interest rate
• When you will apply for HECM, everything will be verified by your lender, which will cover your income, assets, expenses, good credit as well as how up to date you are on your taxes and insurance premiums
• If you decide to go with a fixed-rate loan, you will receive the same amount of money each month, which is termed as Single Disbursement Lump Sum Payment Plan
• For the ones who want to opt for an adjustable rate, they can choose between fixed monthly payments or flexible monthly payments funded by a line of credit or the combination of the two
HECM And The Associated Costs
• When you apply for HECM, the cost of these reverse mortgage solutions will include an insurance premium between .5 and 2.5 percent of the total loan amount that covers any third-party charges, title search and insurance, and inspections
• There will be an origination fee of up to $6,000 along with $35 as monthly servicing fee
It is completely your choice whether you want to finance these costs as a part of the mortgage, (which will reduce the total amount of payments you will receive) or you want to pay these costs upfront.
On the whole, HECM is those reverse mortgage solutions that give you the flexibility to have an inflow of ready cash. The best part is all payments are delivered in increments so that you don’t run out of income as you age. Being backed by FHA is its biggest plus point as it gives you the assurance that your investment is fully protected. So, when you are thinking about long-term financial retirement plans, there are no better mortgage solutions than HECM. Of course, you have to meet certain requirements before obtaining one.
Hawaii Reverse Mortgage 