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Who qualify for FHA´s HECM reverse mortgages?
Homeowners over 62 years old with a low mortgage balance or who own the property outright and who live in the home. Successful applicants are required to receive consumer information (this service is provided for a small fee or free from a HECM counselor and prior to the loan) Whether you bought your home with an FHA-insured mortgage or not you may still apply for a HECM. The home you own has to be a single family home or a 2-4 unit home –one unit must be occupied by the borrower. Also eligible are HUD approved condominiums and manufactured homes meeting FHA standards.
A normal second mortgage or home equity loan is one where you would need adequate income in order to qualify because you have to make the monthly payments on the principle as well as on the interest. This is different from a reverse mortgage in which you don’t have to repay the loan until you no longer use the house as your primary residence or if you fail to meet the obligations of the mortgage. There are no monthly principal and interest payments, however, you have of course the responsibility of paying real estate taxes, utilities, and hazard and flood insurance premiums. When you sell the home or it is no longer used as a primary residence then you have to repay the cash, the interest, and other HECM finance charges. This is important for those borrowers who are concerned about leaving an estate to their heirs because any equity remaining after these payments are made can be transferred as an inheritance and no debt will be passed down to the heirs.
Concerning The Amount That You Need To Borrow
The amount you borrow from a reverse mortgage will depend on what you need the money for. Maybe you want more financial security, you have a sudden medical emergency or maybe you need to make some home improvements. Whatever the circumstances the HECM is a product that could work for you.
Your age has a bearing on the amount you may borrow as does the current interest rate. Another consideration here is whichever is the lesser appraised value—the HECM FHA mortgage limit of $625,500 or the sales price. The Initial Mortgage Insurance Premium is a factor too.
You can opt for HECM Standard or HECM SAVER. If you choose the HECM Standard you can borrow more capital. In fact the older you are and the lower the interest rate, the more you can borrow. Sometimes there is more than one borrower and if that is the case the amount you may borrow depends on the age of the younger of the borrowers. In order to get an estimate of the amount you could borrow you could go to the HECM Home Page and select a calculator. It is definitely better not to use a fee charging service to be referred to an FHA lender.
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