A FHA-insured HECM is a special, loan that enables over 61 year-old homeowners, to pay-off debt including mortgage(s), convert part of their home equity into tax-free* cash-money, or monthly income, or all three without having to sell their home, give up title to it, or make monthly mortgage payments. The loan becomes due when the last borrower(s) permanently leaves the home or passes-away.
* Consult Financial Advisor.
Yes, you can! Although there are some limits on the amount that can be paid-off, the new FHA HECM can replace your current “make-the-payment-home-loan” with a “no-payment home-loan”.
Both a FHA-insured HECM mortgage and a home equity loan use the equity you have built up in your home to provide you with readily available cash.
They differ in that with a home equity loan is a mortgage you must make regular monthly payments of principal and interest or risk foreclosure. However, with the new, FHA-insured HECM you do not make any required monthly mortgage payments for as long as you are alive and stay in the home.
No. Since with the FHA-insured HECM mortgage borrowers need not make monthly repayments, there are no income, credit or employment requirements or qualifications.
There are many. Here are a few of the most significant:
* Consult Tax Advisor
It’s absolutely false. The borrower retains title to the property for life, unless they move away. The new, FHA-insured HECM mortgage lender is merely extending a loan to the borrower.
Because the homeowners retain title, they remain responsible for the payment of property taxes, hazard insurance, and maintaining the home in reasonable condition – just as they would with a standard first mortgage or home equity loan.
Yes. Refinancing can make sense if your can get more money, either in a lump sum or as monthly income; the interest rates drops or; the rate can be fixed. Keep in mind that when deciding to refinance a new, FHA-insured HECM, it is important to compare the amount of benefit versus the cost of the loan before making this decision.
No they cannot. You cannot outlive the loan. And the loan is not due at the time you pass away either. Your heirs will have 12 months to decide whether to keep your home or sell it. In fact, you don’t need to repay the loan as long as you or another borrower (usually your spouse) continues to live in the house as the primary residence and keep the taxes and hazard insurance paid.
The amount you can borrow depends on several factors, including your age, the type of FHA-insured HECM mortgage you select, current interest rates, the appraised value of your home and FHA’s lending limits for your area. In most cases, the older you are, the more valuable your home, and the less you owe on it, the more money you can get. Call us to get a dollar amount available to you (800)630-0650.
No. You can use the money for virtually anything you choose, from daily living expenses, home improvements and repairs, healthcare expenses, getting long-term care insurance, paying off existing debts, paying off existing mortgage(s), helping your children and grandchildren, or simply enhancing your retirement years. For many people, the money provides a “financial security blanket,” in case unexpected expenses arise down the road.
Most definitely. With most FHA-insured HECM mortgages you have a wide range of options for you to get the money, one of which may be ideal to meet your financial needs.
Homeowners 62 years of age or older may qualify. There are virtually no income, employment or credit qualifications.
Yes, this is the most popular use of the new, FHA HECM over the last year. If you are 61 years old or older you may be eligible for a new, FHA-insured HECM mortgage that pays off the money you owe on a first or second mortgage and completely eliminates those monthly payments, for the rest of your life! The funds you would receive from the new, FHA-insured HECM program could be used to pay off whatever existing mortgages you have on the property AND give you additional money, either all at once or as tax-free monthly income, or both.
Unfortunately, at this time, no. The new, FHA-insured HECM Program may only be taken out on your primary residence.
First and foremost, the new, FHA-insured HECM mortgage must be on the borrower(s) primary residence, that is, where they live most of the year. Most FHA-insured HECM mortgages are taken on single family, one-unit homes. Some programs also accept two-to-four unit buildings that are owner-occupied. Some programs offer the new, FHA-insured HECM on condominiums and manufactured homes built after June 1976. Mobile homes and cooperatives are generally not eligible for a new, FHA-insured HECM mortgage.
Yes. In most cases a homeowner who has put his or her home in a revocable living trust can usually take out a new, FHA-insured HECM mortgage. A review of the trust documents would be conducted by the new, FHA-insured HECM mortgage lender to determine if anything in the living trust would be unacceptable.
Your new, FHA-insured HECM loan becomes due when one or more of the following conditions occurs: (a) the last surviving borrower passes away or sells the home; (b) all borrowers permanently move out of the home; (c) the last surviving borrower fails to live in the home for 12 consecutive months; (d) the borrower(s) fail to pay property taxes or hazard insurance.
Usually, when one of these events has occurred, the owners or heirs have 12 months in which to resolve the situation.
A non-recourse loan is a home loan in which a lender may look only to the value of the home for repayment of the loan; no other assets may be attached if the loan balance grows beyond the subject property home value. The new, FHA-insured HECM is a non-recourse loan.
Yes. When you sell your home or no longer use it as your primary residence, or pass away, you or your estate will have 12 months to repay the lender for the amount you owe on the FHA-insured HECM mortgage. Any remaining equity belongs to you or your heirs. It’s important to remember that you can never owe more than the fair market value of the home when it is sold. None of your, or your heirs, other assets will be affected by your FHA-insured HECM mortgage loan.
No, never. If the borrower or heirs/estate do not wish to retain ownership of the property upon loan maturity, the borrower or heirs/estate will not be required to pay more than the home is worth upon loan maturity.
In the event the borrower or heirs/estate decide to keep the home upon loan maturity, the borrower or heirs/estate will be responsible for the full amount owed and can refinance that amount into their names using a number of programs that allow that, unless the amount owed is more that the value of the property, then all that is owed is up to the current value, at that time. Your heirs may have many options to easily keep the home at the time of inheritance.
These new, FHA-insured HECM mortgages have a FHA-insurance fee, origination cost, third party closing costs (such as appraisal, title and escrow), insurance, and a monthly servicing fee. These charges are typically paid from the proceeds of the new, FHA-insured HECM mortgage itself at the time of funding, resulting in no immediate or out-of-pocket burden to the borrowers.
The new, FHA-insured HECM mortgages extended to seniors have, either low, variable rates that are tied to a financial index and will vary according to market conditions, or a fixed rate HECM program. Keep in mind, as there is never a monthly payment that you have to make, changes in an adjustable interest rate can never lead to you losing your home. There are times when the adjustable-rate HECM is a better option for a homeowner.
Yes! A new feature of the new, FHA-insured HECM is that it can be used to buy a home. Any person 61 years old or older, with a down payment, can buy themselves a home to live in and then live there for as long as they like with no monthly mortgage payments, ever!
Give us a call today at 1-800-630-0650 and speak with a caring reverse mortgage adviser that will assist you with any questions you may have and who’ll be your personal guide throughout the entire learning and/or loan process.