REVERSE MORTGAGES (HECM) and What This Means

By
Mortgage and Lending with Benchmark Mortgage nmls 2143 NMLS # 198479

THE HOME EQUITY CONVERSION MORTGAGE (HECM) is the ONLY reverse mortgage that is insured by the federal government.  HECM loans are insured by the Federal Housing Administration (FHA).  FHA is governed by US Department of Housing and Urban Development (HUD).  FHA tells HECM lenders how much to lend based on  age and the value of home.  The HECM program limits loan costs and FHA insures the lender will meet their responsibilities.

HECM usually give the largest payout of any reverse mortgage as well as more choices on how the money is paid and most importantly you can use the money for any purpose.  Reverse Mortgages can be costly but HECM's are generally less expensive than those that are privately insured.  Privately insured reverse mortgages may have lower fees but are usually higher in interest rate.  Overall, HECM's  are likely to be less expensive in the long run.

The state and local government sometimes offer reverse mortgages which cost the least but they are most always used for one specific purpose such as to pay your taxes or make a certain repair.  Also mostly available to low to medium income.

HECM's are available all over the United States.  A few key factors:

*  Youngest owner must be 62 or older, live in home as primary residence and not be delinquent on federal debt.

*  Home must be a single-family residence in a 1-4 unit dwelling or part of a planned unit development (PUD) or a HUD approved condo.  Some manufactured homes are eligible but most mobile homes are not. 

*  Home must meet HUD's property standards but you have the option of using the HECM to pay for repairs that could be required.

*  All homeowner's wishing to seek a HECM must attend counseling from a HUD-approved counseling agency.  Loan officer can provide a list of counselors and borrower's must present an original certificate before loan can be approved.

 

Comments (4)

Debbie Hutchins
Birmingham, AL

So many changes in the real estate industry and so many new mortgage programs and changes to existing ones!  Most realtors try to keep up with this to a certain degree to be able to help their clients but the key ingredient is a knowledgable mortgage loan officer that can help your client make these very important decisions.  It is comforting to know that you stay informed and are just a phone call away! 

Jan 24, 2010 12:58 PM
Not a real person
San Diego, CA

Just stopped by to let you, and anyone reading this, know that there's an ActiveRain Super Bowl Party going on. Stop by if you have a chance.

Feb 07, 2010 12:03 PM
Ashlee Springer
Keller Williams, Alabaster, AL - Alabaster, AL
Expert Realtor Working with First Time Homebuyer

This is great information.  Great program for some.

Mar 12, 2010 03:16 AM
Ashlee Springer
Keller Williams, Alabaster, AL - Alabaster, AL
Expert Realtor Working with First Time Homebuyer

This is great information.  Great program for some.

Mar 12, 2010 03:17 AM