If you’re a homeowner of age 62 or older and paid your mortgage off or paid down a significant amount, and you are currently residing in your home, you might participate in the Federal Housing Administration’s HECM loan (home equity conversion mortgage) program. The home equity conversion mortgage program is the FHA’s reverse mortgage plan that allows you to withdraw a part of your home’s equity.
Also, it’s possible to use a home equity conversion mortgage to buy the main residence if you have the ability to use cash-on-hand that will pay the difference in between the proceeds of the HECM and sales price, in addition to closing costs for the home you’re buying.
How Does the Program Work?
There are several factors to think about before determining whether this type of loan is the right one for you. To help in this process, you have to meet with a counselor to talk about program qualification requirements, financial alternatives and implications to getting an HECM and paying back the loan. Also, counselors will talk about provisions for your mortgage becoming payable and due. After the completion of counseling, you ought to have the ability to make an informed, independent decision of if this product is going to meet your unique needs.
There are property and borrower qualifications that have to be met. It’s possible to use the listing here to check if you’re eligible. If you meet the qualifications, you may complete your reverse mortgage application by calling a Federal Housing Administration-approved lender. It’s possible to browse the Internet for a Federal Housing Administration-approved lender, or you may ask the counselor to offer you a listing. The lender is going to discuss additional requirements of the HECM plan, like first-year payment limits, available options for payment, repayment terms, and the process for loan approval.
Borrower Requirements
You have to:
•Be at least 62 years old or older.
•Outright own the property or paid down a significant amount.
•Occupy the home as your principal property.
•Not be delinquent in any federal debt.
•Have financial sources to continuously make payments on a time of continuous property charges like insurance, property taxes, and fees for Homeowner Association, etc.
•Engage in a consumer data session provided by a HUD- approved counselor.
