Articles Tagged With: Property Taxes

September 1, 2011

FHA Updates Rules for HECM Loan Counseling

FHA Home Equity Conversion Mortgages, also known as HECM loans, are for qualified borrowers 62 or older who want to apply for a loan on their home using the equity in the home to secure the mortgage. This type of loan features cash out to the borrower and is not paid back until the borrower dies or sells the property. FHA HECM loans are unique because they offer money to the borrower as a monthly installment, a line of credit or other arrangements as permitted by FHA rules. The FHA requires applicants to get HECM-specific loan counseling before they can commit to the mortgage due to the terms and conditions of the mortgage loan. Some of those terms and conditions require the borrower to meet all loan obligations (including staying | more...

June 1, 2011

FHA Loans and Escrow Accounts

By Joe Wallace

The Real Estate Settlement Procedures Act provides powerful consumer protections when it comes to home loans. It establishes limits, requires lenders to be transparent when it comes to fees and expenses, and requires the borrower to be fully informed as to the costs of a home loan. FHA borrowers and conventional loan applicants alike are protected under RESPA. There are many protections, rules and requirements under RESPA, but one particular part of the act applies to escrow accounts for real estate loans. According to the FHA official site, “Section 10 of the Real Estate Settlement Procedures Act (RESPA) limits the amount of money a lender may require the borrower to hold in an escrow account for payment of taxes, insurance, etc. RESPA also requires the lender to provide initial and | more...

May 20, 2011

FHA Loans: Ineligible Properties For HECM Purchase Loans

By Joe Wallace

The FHA Home Equity Conversion Mortgage, also known as a reverse mortgage, is for borrowers age 62 or older who want to borrow against the equity built up in their homes. There are a variety of requirements for this unique FHA loan product which allows eligible borrowers to make no mortgage payments, collect cash against the equity in the home or get a line of credit. The loan is paid off when the borrower dies or sells the property. There is a variation of the HECM loan known as a HECM Purchase loan. According to the FHA, HECM Purchase Loans allow “seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.” FHA HECM loan requirements include using the home as the primary | more...

March 12, 2011

FHA Reverse Mortgages: What Makes Them Come Due?

By Joe Wallace

One of the most attractive features of an FHA reverse mortgage for some applicants is that the loan does not come due until the applicant dies or sells the property. There are no monthly mortgage payments on an FHA Reverse Mortgage, also known as an FHA Home Equity Conversion Mortgage. Instead, the loan is paid off as described above (when the owner dies or sells the home). The borrower–who must be age 62 or older–gets the proceeds from the loan to use as needed. But there are issues which could make a HECM loan due immediately–what could force the lender to call in the loan immediately? There are several scenarios. The terms of an FHA reverse mortgage require timely payment of property taxes, hazard insurance, and any other financial obligations | more...

February 14, 2011

FHA HECM Loans: When Do They Come Due?

By Bruce Reichstein

An FHA Home Equity Conversion Mortgage loan (or HECM for short) is available for qualified borrowers age 62 and older who have equity built up in their home and want to borrow against it. HECM loans are described by the FHA as being a great deal different than the traditional second mortgage for several reasons; "With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments...."

January 7, 2011

New FHA Guidance For HECM Loan Borrowers, Lenders

By Joe Wallace

FHA Reverse Mortgage Loans, also known as Home Equity Conversion Mortgages or HECM, provide a way for seniors age 62 and older to borrow against the equity in their homes. Under HECM loan rules, the borrower does not make monthly mortgage payments--the home is paid off when it is sold or when the borrower dies. But that lack of monthly mortgage payments may lead some borrowers to assume there are no payments due on the home whatsoever. This is not true--property taxes are still due, as are hazard insurance premiums or other commitments.

December 28, 2010

FHA Reverse Mortgage Options

By Joe Wallace

FHA HECM loans or reverse mortgages are designed for borrowers age 62 and older. These mortgages are designed to let qualified applicants take out a loan against the equity in the home--loans that can be used for living expenses, home improvements, even the purchase of a primary residence if the borrower is willing to pay (in cash) the difference between the FHA HECM loan amount and the sales price and closing costs. According to the FHA, HECM loans differ from typical home loans or second mortgages because, "no repayment is required until the borrower(s) no longer use the home as their principal residence or fail to meet the obligations of the mortgage."

November 11, 2010

Does the FHA Require an Escrow Account for FHA Mortgages?

By Joe Wallace

In our last post, we discussed escrow accounts, which a lender may require to be set up in connection with an FHA loan in order to pay mortgage insurance, property taxes and other expenses with no fear of missed payments or penalties for late payments. When a lender sets up an escrow account in the buyer's name for these purposes, they often add the costs of the insurance and other payments into the mortgage, making one simple payment for the buyer. The extra money is placed into escrow and held until it is needed to pay the insurance, taxes or other items.

November 11, 2010

What is an Escrow Account and Why Do I Need One for an FHA Loan?

By Joe Wallace

If you're thinking of buying that first home, you've probably read plenty of real estate articles and brochures with a wealth of new vocabulary. One of these is "escrow". Until applying for an FHA home loan, many people have never needed an escrow account so it's no surprise that "What is an escrow account and why do I need one for an FHA mortgage?" is such a common question.

May 28, 2009

Repaying an FHA Reverse Mortgage

By Bruce Reichstein

When you take out an FHA reverse mortgage or HECM, no payments are due until you sell the home. Did you know there are other situations that could make your loan come due? Here are four situations to be aware of that cause your FHA reverse mortgage to come due even if you haven't sold your home.