Tips Getting Your Reverse Mortgages
For over 90% of all loans accounts HECM reverse mortgage Loan.
Its popularity is mainly because it is insured by the US government using the FHA insurance scheme. HECM stands for Home Equity Conversion Mortgages and is administered by the U.S. Department of Housing and Urban Development (HUD). This program is often called a HUD or FHA reverse mortgage.
The maximum amount that can be borrowed is based on the value of the equity in the home, its location, current interest rates and the age of the borrower(s). At present the maximum amount that can be borrowed varies from $200,160 to $362,790.
The property must be a single family dwelling or two-to-four unit. Some other types of dwelling are also eligible such as, townhouses, detached homes, units in condominiums and some manufactured homes.
FHA’s reverse mortgage program collects funds from insurance premiums charged to the homeowners. An upfront insurance premium of 2% is charges based on the maximum amount that can be borrowed, with an annual premium of 0.5% that is paid on a monthly basis for the life of the loan. There are several optionshere.
There are 5 payment plans to choose from, all of which can be changed whenever the borrower wishes - a small charge is made for doing so.
Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term - equal monthly payments for a fixed period of time.
Line of Credit - unscheduled payments or in installments, at any time and any amounts until the line of credit is exhausted - this option is not available in Texas.
Modified Tenure - combination of line of credit with monthly.
Modified Term - combination of line of credit with monthly payments for a fixed period of time.
Reverse mortgages must be paid off upon the death of the homeowner, or if the borrower has not lived in the home for 12 months. This could be an issue if the borrower is placed in a nursing home and then recovers, only to find the home sold.- While regular Social Security and Medicare benefits are not effected, other programs such as Medicaid and Supplemental Security Income (SSI) may be affected.- There are significant up front costs, so reverse mortgage are generally only a good idea for people who intend to live in their homes for at least five yearsIn general, reverse mortgages have advantages and problems, and proper research is required before determining if a reverse mortgage makes sense for you
