Reverse Mortgages
A Reverse Mortgage (also known as an HECM, a Home Equity Conversion Mortgage) is a mortgage loan, insured by FHA and HUD, that enables homeowners over 62 to convert part of their home into tax free payments or draws without having to sell, give up the title or take on new mortgage payments.
Reverse Mortgage Line of Credit
The reverse mortgage loan amount is calculated by a program managed by FHA/HUD using the home value, the age of the youngest homeowner or borrower, an age expectancy projection and the current reverse mortgage interest rate.
This loan amount can be set up as a line of credit (LOC). The homeowner has the option to withdraw funds as needed. Interest is not charged on the balance in the LOC. Once the homeowner withdraws funds out of the LOC, that balance is added to the reverse mortgage loan balance and is charged interest at that time.
The balance of funds in the LOC or unused funds does expands at the current interest rate of the reverse mortgage loan.
Reverse Mortgage Monthly Payment
The reverse mortgage loan amount is calculated by a program managed by FHA/HUD using the home value, the age of the youngest homeowner or borrower, an age expectancy projection and the current reverse mortgage interest rate.
The reverse mortgage loan amount can be converted to a monthly payment automatically deposited in the homeowners account. This option helps increase the homeowner’s monthly cash flow to meet monthly financial needs.
Reverse Mortgage Replacing and Paying Off an Existing Mortgage
The reverse mortgage loan amount is calculated by a program managed by FHA/HUD using the home value, the age of the youngest homeowner or borrower, an age expectancy projection, and the current reverse mortgage interest rate.
The reverse mortgage can pay off an existing mortgage. This creates monthly cash flow for the homeowner as there is no monthly PI payment. The homeowner will need to pay property taxes, homeowners insurance, HOA dues and maintain the property.
Reverse Mortgage Purchase
The reverse mortgage loan amount is calculated by a program managed by FHA/HUD using the home value, the age of the youngest homeowner or borrower, an age expectancy projection and the current reverse mortgage interest rate.
In 2009, a reverse mortgage purchase program was added. Seniors can buy a home with a reverse mortgage by coming in with a down payment of 35-50% depending on the age of the youngest borrower.
This gives Seniors plenty of options when downsizing or moving closer to family. This is the only program that will allow seniors to buy a home with no monthly payment other than paying cash for the home. The homeowner will need to pay property taxes, homeowners insurance, HOA dues and maintain the property.
Also, its possible senior homebuyers may be able buy a larger home to fit their needs if they can’t find a house within their cash budget.
Alternative Reverse Mortgage Purchase
This reverse mortgage loan amount is calculated by a program managed by a Reverse Mortgage Company (not FHA/HUD not a HECM) using the home value, the age of the youngest homeowner or borrower, an age expectancy projection and the current reverse mortgage interest rate.
These programs are for higher end homes up to $5 million dollars and other homes that may not fit into the FHA/HUD, HECM program. The minimum age for this program is 60 years of age or less.
This program offers cash out, exiting mortgage payoffs and a purchase program. The LOC or line of credit option will vary by State.
For more detailed information, please contact Bruce Anderson, CRMP® at 505-858-3825
Bruce Anderson – (CRMP) NMLS#237538 -Certified Reverse Mortgage Professional providing seniors with Reverse Mortgages in all areas of Colorado, New Mexico and Texas!
Call (505) 858-3825