HECM Can Supplement Your Income

Home Equity Conversion Mortgages (HECMs) are the only reverse loans that are insured by the federal government. Only reverse mortgage lenders approved by the Federal Housing Administration (FHA) can offer HECMs, which are the most popular reverse mortgage program in the U.S. Here are some things to know about reverse loans.

Reverse Mortgage Counseling

To borrow with HECM loans you must obtain counseling from an FHA-approved agency. HECM counselors must:

•Pass a standardized exam administered by HUD;
•Complete training related to HECMs within the previous two years;
•Have access to technology that allows HUD to track the results of counseling to clients;
•Retake the HECM exam every three years.
To find a reverse loan counselor in your area you can contact the Housing Counseling Clearinghouse at (800) 569-4287, or search online. Prepare a list of your concerns and questions about reverse mortgages before your counseling session.

HECM and Home Equity

When you take out a reverse mortgage, you tap into your home equity. Unlike a traditional mortgage that requires you to make monthly payments, a reverse home mortgage pays you. The more valuable your home is, the more you may be able to borrow. The amount you can get also increases as you age.

As long as you live in the home as your principal residence and stay current with insurance and taxes, you can stay without paying back a reverse loan. Remember, proceeds from a reverse mortgage can be used to buy another home to live in as your principal residence.

Compare Reverse Mortgage Lenders

Even though reverse mortgage lenders must meet federal guidelines, it is still important to shop around to compare reverse loan quotes. Make sure you understand all the closing costs, terms, and conditions associated with any reverse mortgage you are considering.

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HECM Reverse Mortgage Loans! The 5 Things to Know Before You Go On

Many American seniors use the reverse mortgage loans to supplement their social securities, to meet unexpected medical expenses, to buy a home for their children, to make home improvements, to travel or just to get some extra money.

1. What Are The Reverse Mortgage Loans

You can think in this way. You have paid for years for your normal mortgage loan and your home is fully paid or at least almost. Today your family relations have changed, children have moved and you live alone or with your spouse.

Usually your income have also dropped and you may have some extra expenses, like medicine costs.

You are maybe living in a house, which is too big for your purposes, but you are unwilling to move, because all your friends and memories are linked with your home. What to do? The reverse mortgage loans offer great help. You can take cash against your home without paying anything back every month.

2. Who Can Qualify?

One of the great ideas of the reverse mortgage loans is, that the qualification has been done easy.

When the loan will be taken against the equity of your home, the only thing you must have is the home, which has equity left and that you are American of age at least 62. Your monthly income, or income in general, has no meaning, nor your other assets.

3. What Home Types Are Eligible?

HECM approves either a single family home or a home of 1-4 unit, which has one unit occupied to the borrower. The manufactured homes and condominiums, if they are HUD approved, are eligible also. You can make sure, that your home fulfils these requirements, before you go on.

4. What Are The Differences Between The Normal Loans And The Reverse Mortgage Loans?

Well, actually before you can get a usual mortgage loan, you must have a certain monthly income compared with the loan sum and you must pay the loan back every month. The reverse mortgage loans work in reverse. The lender pays to the borrower.

The borrower will pay anything back until the loan will be closed down. Then all the costs, interests and the loan capital will be paid back.

If the selling price of your home does not cover the expenses, the compulsory mortgage insurance will be used, so you will never owe more than the price of your home.

The maximum amount, which you can get depends on your age, interest rates and the appraised value of your home or the limits, which FHA has for the area, where you live. We can say, that the older you are, the lower is the interest rate and the more valuable your home is, the more you can borrow.

5. Can The Lender Take My Home, If I Do Not Pay?

As long as you pay your home insurances and taxes plus keep the home in a good condition, the lender can never take your home.

As said above, in the case that you are not able to pay the expenses, the mortgage insurance will take care of them. You will never owe more than the value of your home.

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