Reverse Mortgage Options
- Home Equity Conversion Mortgage
- Private Reverse Mortgages
Home Equity Conversion Mortgage (HECM) reverse mortgages
A Home Equity Conversion Mortgage (HECM) is a federally insured reverse mortgage.
Ninety-five percent of all reverse mortgages are HECMs. The Federal
Housing Administration (FHA) sets limits on how much a HECM reverse mortgage lender
may lend you—based on your age and home's value —and what your total loan costs
will be. HECM loans give you a wide choice in how you may receive the cash from
the reverse mortgage. HECM loans generally provide the larger loan advances than
other reverse mortgages.
Home Equity Conversion Mortgage (HECM) Frequently Asked Questions
Q. Since federally-insured HECM loans are regulated by the U.S.
government, are all HECM loans the same?
A. Yes and no. All HECM lenders must follow HUD rules and many
of the loan costs.
Q. What are the eligibility requirements for a HECM loan?
A. You, and any other current owners of your home, must be aged
62 or older. The home must be your primary residence. It may be either a single-family
residence in a 1- to 4-unit dwelling, a condominium, or part of a planned unit development
(PUD). Though some manufactured housing is eligible, most cooperatives (subject
to change) and most mobile homes are not. The home must meet HUD's minimum property standards*. Finally, you must agree to discuss the
program with a counselor from a HUD-approved counseling agency.
* Note: If the house is not up to HUD's standards, you may use the HECM loan to
pay for repairs that may be required to bring it up to their standards.
Q. Are there any advantages by taking my HECM loan as a line of
credit?
A. Yes. That's because a HECM line of credit continues to grow
over time, increasing the amount of cash available to you until you withdraw all
of it. That is possible because the remaining balance in your line of credit grows
by the same total rate that is charged on your loan balance.
Consider this example. Say you have a HECM line of credit of $150,000 and you withdraw
$25,000. The remaining line of credit would be $125,000. If your next withdrawal
is a year later you would have more than $125,000 available to you. Here's how it
works to your advantage: if the total loan rate is, for instance, 6%, your available
credit line would be 6% higher than it was a year earlier. Instead of having $125,000
available you would have $132,500 in your line of credit (6% of $125,000 = $7,500).
In this example, you would have an extra $7,500 available to you in year two of
your reverse mortgage. A nice added bonus.
Q. How are the interest rates computed for a HECM reverse mortgage?
A. The HECM rates are based on the T-Bill (U.S. Treasury bills)
and Libor (London Interbank Offered Rate) interest rate plus margin. It is adjusted
either monthly or annually, or the rate can be fixed for life.
Q. Are HECM loans available throughout the
U.S. ?
A. HECM loans are available in all 50 states, the District of Columbia
, and Puerto Rico . (HECM credit line options are available in all states except
Texas .) HECM fixed rate loans are available in most states.
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Private Reverse Mortgages
These programs have been designed specifically to meet the
needs of senior homeowners with substantial home equity.
These private reverse mortgages are currently unavailable.
Ask Us About The Products When You Call For More Details.
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