Articles in Category: Reverse Mortgage or HECM

August 12, 2024

Reverse Mortgages: HECM and Non-FHA Options

Reverse mortgages have become increasingly popular as a retirement financial planning tool. They give homeowners a way to access their home equity without having to make monthly payments, and that equity can come as a lump sum of cash or installment payments, or via a line of credit. Some disbursement options may be open to all applicants, others may depend on circumstnaces. When looking into reverse mortgage options, you will come across two main types: FHA reverse mortgages, also known as Home Equity Conversion Mortgages, and non-FHA reverse mortgage options offered by conventional lenders. The FHA HECM is a reverse mortgage with a government guarantee. That government backing provides the lender with some protection in the event of loan default, making it easier for the lender to approve the loan. | more...

August 1, 2024

Comparing Conventional Reverse Mortgages To FHA HECMs

By Joe Wallace

A reverse mortgage is a refinance option for homeowners 62 or older who want to tap into their home equity. These loans are designed for senior homeowners who own their homes outright or are close to doing so. There are FHA reverse mortgages and conventional equivalents. Some borrowers are right for a conventional option, while others should consider the FHA HECM. Traditional mortgages require monthly payments to a lender. In contrast, reverse mortgages allow senior homeowners to borrow money secured by the equity in their home. These loans offer cash back to the borrower in a variety of options, including a lump sum, monthly payments, or a line of credit. Typically, repayment is not required during the borrower’s lifetime unless the home is sold or no longer used as the | more...

Rehab Refinance Loans, reverse mortgages

July 23, 2024

Pros and Cons of Refinancing Versus Reverse Mortgages

By Joe Wallace

As we age, sound financial decisions become increasingly crucial. For many seniors, leveraging home equity is a key consideration, and there are two important options to know in this area. Two FHA loan products can help you access home equity. One has an age requirement (the reverse mortgage) and one does not (refinancing.) Those two options are FHA reverse mortgages and FHA refinancing. Each option has its pros and cons, which is vital for making an informed decision. Reverse mortgages offer seniors a way to boost monthly cash flow. They eliminate required monthly payments, providing significant financial flexibility. Additionally, they offer lump-sum payouts, which can help cover home repairs, medical expenses, or other significant costs. However, reverse mortgages have drawbacks. The most notable is the gradual depletion of home equity. | more...

July 16, 2024

Do You Need Help Understanding Your FHA Loan?

By Joe Wallace

The variety of FHA home loan programs, including construction loans and reverse mortgages, can be overwhelming for many borrowers. HUD-approved housing counseling offers invaluable support to help borrowers make informed decisions about these complex programs. You can get a free referral to a HUD-approved housing counselor by calling 1-800-CALL FHA. FHA Loan Counseling: Your Path to Homeownership The Federal Housing Administration (FHA) insures mortgages, reducing lender risk and expanding access to homeownership for individuals with lower credit scores or limited down payment funds. However, understanding the nuances of certain FHA loans, such as reverse mortgages and construction loans, can be challenging. Did you know you can call HUD to get a referral to an approved housing counselor to help you through the process? Housing counselors can help you in the | more...

July 15, 2024

Understanding the Costs of an FHA Reverse Mortgage

By Joe Wallace

An FHA reverse mortgage, or Home Equity Conversion Mortgage (HECM), can provide financial flexibility for qualifying homeowners aged 62 or older, but it’s crucial to understand the associated fees and expenses. If you meet the HECM age requirement and either own your home outright or are very close to doing so, what follows will be helpful for you. Primary Costs When considering an FHA reverse mortgage, you should be prepared to pay several key costs: FHA mortgage insurance, interest fees, lender’s fees, and potential service charges are among them. FHA mortgage insurance premiums consist of an initial 2% charge, followed by annual premiums of 0.5% of the outstanding loan balance. The FHA does allow borrowers to finance the upfront mortgage insurance premium as part of the loan. Additional Expenses In | more...

April 2, 2024

FHA Home Equity Conversion Mortgages In 2024

By Bruce Reichstein

As further news comes in about improving housing market conditions (however slowly the market may improve), some homeowners are again thinking about their options, including FHA refinance loans and programs that let borrowers take the equity in their homes out in cash. For those reviewing FHA loans, options can include cash-out refinancing as well as an option for those 62 or older who own their homes or have nearly paid them off. FHA Reverse Mortgage Facts The FHA reverse mortgage allows a qualified borrower to get cash at closing time on a loan that is not due until the borrower dies, sells the home, or stops using it as their home address. Borrowers do not make mortgage payments with an FHA reverse mortgage. However, there are payments to be made. | more...

December 4, 2020

2021 FHA Home Equity Conversion Mortgage Loan Limits

By Joe Wallace

The Department of Housing and Urban Development has published FHA loan limits for the FHA Home Equity Conversion Mortgage (HECM) loan program for 2021. Home Equity Conversion Mortgages, also known as FHA Reverse Mortgages, are offered to financially qualified borrowers age 62 or older who either own their homes outright or are very close to doing so. FHA HECM loans feature no monthly payments; the borrower receives cash from the loan based on terms negotiated with the participating lender; the loan is normally due when the borrower dies or sells the home. The loan may also be declared due in full if the borrower quits using the property secured by the HECM loan as their primary address. Borrowers are required to use escrow to pay property taxes and must follow | more...

June 4, 2020

Reverse Mortgage And Foreclosure Relief Scams: What You Need To Know

By Bruce Reichstein

Mortgage scams and reverse mortgage scams involve people coming to you with offers to save you from a pending foreclosure, or offer you a reverse mortgage to help cash in on the equity you have built up in the home. But scammers aren’t there to help, they are there to profit from your problems; fortunately, there are ways to tell if you are being scammed and stop a con game dead in its’ tracks. Advice About Scams From The U.S. Government The Department of Justice offers advice about scams–have you been contacted by third party agencies without having contacted them first? What should you do to prevent being taken advantage of if you need foreclosure relief, or need a home equity loan or reverse mortgage? The first step–identifying the biggest | more...

Conventional Loan Interest Rates Make History, FHA Loan Rates Still Incredibly Low

June 1, 2020

Refinance Loan Options: Choose Wisely!

By Bruce Reichstein

Mortgage loan interest rates have been on a wild ride in 2020. Coronavirus, incredible lows for rates, market volatility, and much more have all created an environment that feels as unpredictable as mortgage rates have seemed. And the rollercoaster isn’t over yet. Finance blogs are still reporting as late as June 1, 2020, that refinance loan demand has actually grown larger than the demand for new purchase mortgages. That isn’t shocking in an era where rates have, at least on paper, dipped below the three percent range at times (your experience will definitely vary). Those with the ability to refinance into a lower interest rate save money over the course of the mortgage, assuming these borrowers pay on the mortgage over a long period of time. Understanding The Refinance Loan | more...

June 26, 2019

Who Can Apply For An FHA Reverse Mortgage?

By Bruce Reichstein

Borrowers who want to pull cash out of their home, converting value into cash back, have two basic options with an FHA-guaranteed loan. One of those options is the FHA Reverse Mortgage, also known as a Home Equity Conversion Mortgage. This is for borrowers who either own the home or are very close to paying off the mortgage loan on the property. FHA HECM mortgages allow for cash back with no monthly payments required since the loan is paid off when the borrower dies, or sells the property. Does this sound like an option you would like to explore? There is one very important caveat with FHA Reverse Mortgages-they are not available to borrowers under the qualifying age, which is 62 or older. That is why your lender may try | more...