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Since federally-insured HECM loans are regulated by the U.S. government,
are all HECM loans the same?
Yes and no. All HECM lenders must follow HUD rules and many of the loan costs will be the same no matter which reverse mortgage lender you choose.
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What are the eligibility requirements for a HECM loan?
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 and most mobile homes are not. The home must be at least one year old and meet HUD's minimum property standards*. Finally, you must agree to discuss the program with an independent counselor from a HUD-approved counseling agency.
* Note: If the house does not satisfy HUD's requirements, you may use the HECM
loan to pay for repairs that may be required to meet HUD standards.
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How does the raising the lending limit from 417,000 to 625,500 benefit me?
A higher loan limit means that borrowers may increase their benefit by converting a larger portion of their home equity into cash.
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If I already have a reverse mortgage, can I benefit from the higher lending limit?
Yes. Existing borrowers can benefit from the new lending limit by refinancing. In fact, many seniors have already refinanced in order to increase their cash benefit. Keep in mind that when deciding to refinance your reverse mortgage, it is important to compare the amount of benefit versus the cost of the loan before making this important decision. The amount of benefit received should at least be twice the amount of the cost to refinance the loan.
While a general rule of thumb, depending upon the senior's situation, it may be advantageous to refinance even if a lesser amount is received. Financial Freedom always encourages borrowers to speak with a financial expert or other trusted advisor to help them evaluate the decision.
The new lending limit is only effective until the end of 2009, so call today and your Reverse Mortgage Specialist will guide you and help determine whether a reverse mortgage or refinancing an existing one will be beneficial for you.
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How does HECM for Purchase work?
The federally-insured HECM for Home Purchase enables seniors aged 62 years or older to purchase a home with a reverse mortgage. With a HECM reverse mortgage, seniors can move into a new home that suits their needs – smaller, nicer, in a warmer climate or close to children while:
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Eliminating required monthly mortgage payments,
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Increasing buying power,
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Having no income qualification,
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Not being required to pay off the reverse mortgage loan until the last borrower permanently moves or passes away.
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Are there any advantages by taking my HECM loan as a line of credit?
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.
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Are HECM loans available throughout the U.S.?
HECM loans are available in all 50 states, including the District of Columbia.
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