HECM – Hawaii Reverse Mortgage

Why prefer FHA Insured Reverse Mortgage over Single-purpose or Proprietary?

Both a Hawaii reverse mortgage and a home equity loan are commonly used options by older Americans to tap into the equity in their home. If you have owned your home for a long time to be able to pay the balance loan and free up some equity, both loan options can be viable ones to consider for any planned or unplanned expenses in the old age.

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The three types of reverse mortgages are single-purpose, federally insured reverse mortgages and the proprietary. A single-purpose reverse mortgage is offered by the state, local and non-profit agencies, and is considered the least expensive process. Home equity conversion mortgages (HECM) are federally insured reverse mortgages backed by the U.S. Department of Housing and Urban Development. The proprietary type of Reverse mortgage is used generally for a larger advance at a high value.

There is a big difference between a home equity loan and a Reverse mortgage Honolulu. With a home equity loan, you’ll get either an account with a debit card or checks to write against the balance of your approved loan amount. But with a reverse mortgage, you have a choice to get a lump sum payout or a monthly payments.

There are well-defined standard rules to qualify for a reverse mortgage loan. The borrower must be 62 years or more and have significant equity in their home. With an HECM for Purchase, the borrower must have enough money to make the initial investment. With all HECM Reverse Mortgage loans, the owner need to maintain the home and pay the property taxes as well as property insurance. The loan becomes due when the homeowner no longer lives in the home full time or passes away.

There are major benefits of Hawaii reverse mortgage. A Home Equity Conversion Mortgage (HECM) is commonly known as a reverse mortgage. This is a Federal Housing Administration (FHA) insured loan. This type of mortgage loan enables people to access some part of the home equity to obtain funds which are totally tax free. They also don’t have to make monthly mortgage payments. With an HECM loan, borrowers still own their home. These loans can be beneficial for senior homeowners who need extra funds to supplement their retirement income.

The advantages are:

•   You can buy a home that better fits their needs
•   You can move to friends, medical facilities, etc.
•   You can purchase a new home while preserving their cash.
•   You don’t have to pay any monthly mortgage payments for the life of the loan.

Must Read : Hawaii Reverse Mortgage Pros And Cons

The amount of money the borrower can receive with both a traditional reverse mortgage and an HECM for Purchase is based on various factors. The age of the youngest borrower or non-borrowing spouse and the lesser of the appraised value of your home sale price or the maximum lending limit are most important factors. Generally, if the borrower is older, then he / she will be eligible to receive more money. It is important to know that only specific individuals meeting the terms and conditions will qualify for the Reverse mortgage loans.

HECM Reverse Mortgage: Does It Affects The Social Security And Other Benefits?

HECM reverse mortgage, a viable option for the seniors that make their retirement relaxed. Indeed. But retirees do have some common concerns regarding the taxes and reverse mortgage solution. You know everything has its pros and cons and it is always better to get them clarified in the very beginning itself to prevent future confusions. Most of the seniors have this question in mind that whether their other benefits including the social security would be affected if they go with a reverse mortgage in Hawaii. Fair enough! Retirees opting for the reverse mortgage often come up with the concerns like will their pension be affected, what will happen to their Medicare and Medicaid benefits which they are already receiving and so on. Well, there are a lot of myths associated with all these queries and all they need is the facts. And this post is all about the facts that will definitely strengthen their trust in the HECM reverse mortgage.

Let’s start with the social security benefits first, you will be glad to know that HECM reverse mortgage does not hamper your social security. They will not change once you get your reverse mortgage, which means you will keep on receiving your benefits even after this mortgage solution. This was something you contributed in while you were working and receiving a reverse mortgage cannot affect these benefits. It is your right to collect your social security and no mortgage solution can prohibit you from doing that.

Next on the concern list is the pension benefits, well these were the benefits you established with your employer and this cannot be affected by receiving a reverse mortgage. Your pension is that benefit for which you worked hard and saved it for your upcoming years. In no way receiving a reverse mortgage in Hawaii can affect your pension. So just stay relaxed and enjoy your retirement in a better way.

Coming over to Medicare now, this is the part of the social security act only that was created in 1965 to help seniors with their health care costs. It was a way to provide health insurance to seniors aging 65 or above. This was a government program that was specially designed for the seniors to help them from the medical perspective. And, same is the HECM reverse mortgage that is formulated to provide financial help to the seniors. This means you can continue using your Medicare benefits even after taking a reverse mortgage in Hawaii.

Last but not the least is the Medicaid, the only thing that might get affected with your reverse mortgage. The eligibility for this benefit requires the seniors to have no more than $2K ($3K for couples) in assets on any day of the month. However, this does not affect your eligibility for a reverse mortgage but you may not be able to receive your Medicaid benefits once you start getting a reverse mortgage in Hawaii.

So, just make sure to consult a financial advisor before planning out anything. It is better to be safe than sorry.

Everything You Need To Know About HECM Reverse Mortgage

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.

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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

Must Read : Do’s And Don’t of Reverse Mortgage Hawaii

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

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.