Home Equity Conversion Mortgage

Home Equity Conversion Mortgage

Home Equity Conversion Mortgage FHA reversed mortgage is an excellent plan for senior citizens aged above 62 years. In order to become eligible for HECM, you need to own your property and occupy it as a primary residence. You need to participate in a consumer information session given by an approved HECM counselor. HECM counselors have to provide counseling about HECM and other reverse mortgage products.

HECM lets you convert the equity in your home into monthly streams of income, provided you no longer wish to occupy the home. Any mortgage lender, credit union, bank or savings and loan association can provide the HECM loan. If you want to confirm whether the HECM program is right for you, you need to receive consumer education and counseling from the HECM counselor.

The role of HECM counselor is indispensable in obtaining the loan. He needs to discuss the eligibility requirements for the HECM, financial implications and provisions for the mortgage becoming outstanding and so on. Though you can get enough information from the HECM counselor, you need to make independent decisions. You should not allow the counselor to make any decision on your behalf.

If you meet the eligibility criteria required to obtain HECM, you can then fill out the reverse mortgage application. You can contact a FHA-approved lending institution such as a bank, savings and loan association, or any mortgage company. If you find it difficult to locate the FHA-approved lending institution, you can seek the help of the HECM counselor. You can even make use of the HUD’s searchable listing to locate an approved lending institution.

The FHA-approved lending institution offers mortgage amounts based on your age and current interest rate. It takes the appraised value or the FHA insurance limit, whichever is less, into account for determining the mortgage amount.

You need not have any special income or credit qualifications to obtain HECM. You need not repay the loan amount, as long as the property is used as your primary residence. The closing costs may be financed in the mortgage.

You are eligible to get HECM, if you own a single family home or a one to four unit home, in which at least one unit should be occupied by you. You can even own HUD-approved condominiums, manufactured homes, or leased land. Your home needs to meet the property standards set by the FHA.

You can select any of the five HECM payment plans, which include tenure, line of credit, term, modified tenure, and modified term. Tenure plan gives equal monthly payments as long as you occupy the property as a primary residence. Term provides equal monthly payments for a fixed period of time. Line of credit plan offers money in unscheduled payments or in certain installments. Modified tenure is a combination of monthly payments and the line of credit. Modified term is a combination of equal monthly payments for a fixed period and the line of credit. You can even restructure your payment plans, if necessary, for a nominal fee of $20.