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Equity Conversion Mortgages for Seniors ( HCEM )
The Home Equity Conversion Mortgage (HECM) is FHA's reverse
mortgage program which enables you to withdraw some of the equity
in your home. You choose how you want to withdraw your funds,
whether in a fixed monthly amount or a line of credit or a
combination of both.
You can also use a HECM to purchase a primary residence if you are
able to use cash on hand to pay the difference between the HECM
proceeds and the sales price plus closing costs for the property
you are purchasing.
Our HECM counselors will discuss program eligibility requirements,
financial implications and alternatives to obtaining a HECM. They
will also discuss provisions for the mortgage becoming due and
payable. Upon the completion of HECM counseling, you should be
able to make an independent, informed decision of whether this
product will meet your needs.
You can use a reverse
mortgage calculator to help you see if you qualify. If you
meet the eligibility criteria, you can complete a reverse mortgage
application by contacting us:Toll Free at
(877)2-LOAN-24 or (866)446-4050
Borrower Requirements
You must:
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Be 62 years of age or older
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Own the property outright or have a small mortgage balance
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Occupy the property as your principal residence
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Not be delinquent on any federal debt
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Participate in a consumer information session given by an
approved HECM counselor
Mortgage Amount Based On
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Age of the youngest borrower
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Current interest rate
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Lesser of appraised value or the HECM FHA mortgage limit
Financial Requirements
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No income or credit qualifications are required of the borrower
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No repayment as long as the property is your principal residence
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Closing costs may be financed in the mortgage
Property Requirements
The following eligible property types must meet all FHA property
standards and flood requirements:
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Single family home or 1-4 unit home with one unit occupied by
the borrower
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HUD-approved condominium
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Manufactured home that meets FHA requirements
How the Program Works
If you are a homeowner age 62 or older and have paid off your
mortgage or have only a small mortgage balance remaining, and are
currently living in the home, you are eligible to participate in
FHA's reverse mortgage program. The program allows you to borrow
against the equity in your home. You can select from five payment
plans:
- Tenure - equal monthly payments as long as at least
one borrower lives and continues to occupy the property as a
principal residence.
- Term - equal monthly payments for a fixed period of
months selected.
- Line of Credit - unscheduled payments or in
installments, at times and in an amount of your choosing until
the line of credit is exhausted.
- Modified Tenure - combination of line of credit plus
scheduled monthly payments for as long as you remain in the
home.
- Modified Term - combination of line of credit plus
monthly payments for a fixed period of months selected by the
borrower.
You can change your payment options for a fee of $20.
Unlike ordinary home equity loans, a FHA reverse mortgage HECM
does not require repayment as long as the home is your principal
residence. Lenders recover their principal, plus interest, when
the home is sold. The remaining value of the home goes to you or
your heirs. You can never owe more than your home's value.
If the sales proceeds are insufficient to pay the amount owed, FHA
will pay the lender the amount of the shortfall. FHA collects an
insurance premium from all borrowers to provide this coverage.
The amount you can borrow depends on your age, the current
interest rate, other loan fees, and the appraised value of your
home or FHA's HECM mortgage limit for your area, whichever is
less. Generally, the more valuable your home is, the older you
are, and the lower the interest, the more you can borrow. If there
is more than one owner, the age of the youngest owner is used to
determine the amount you can borrow. For an estimate of HECM cash
benefits based on your age, home value, and current interest rate,
go to the
online calculator.
There are no asset or income limitations in order for you to be
eligible for a HECM. In addition, there is no limit on the value
of homes qualifying for a HECM. The value of your home will be
determined by an appraisal. However, the amount that you may
borrow is derived from the lower of the appraised value or the FHA
HECM mortgage limit of $625,500. You are charged an upfront
insurance premium of 2 percent of the maximum claim amount that
may be borrowed plus a 0.5 percent annual premium.
Schedule a free
consultation with our reverse mortgage loan experts.
Repaying a HECM
A HECM loan must be repaid in full when you die or sell the home.
The loan also becomes due and payable if:
- You do not pay property taxes or hazard insurance or violate
other obligations.
- You permanently move to a new principal residence.
- You, or the last borrower, fail to live in the home for 12
months in a row. An example of this situation would be if you
(or the last borrower) were to have a 12-month or longer stay in
a nursing home.
- You allow the property to deteriorate and do not make
necessary repairs.
*Also please note that you cannot loose you home in the event
that you should pass away, your property is passed/transferred
over to you heirs.
For more information please call us Today: Reverse Mortgages
Toll Free at
(877)2-LOAN-24 or (866)446-4050
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