FHA reverse mortgage insurance

HUD Reverse Mortgage
There are many programs and home loan products that allow homeowners to take advantage of the equity they've built up in their homes. One resource qualified FHA mortgage holders have at their disposal is the Home Equity Conversion Mortgage (HECM) loan, also known as an FHA reverse mortgage. FHA HECM loans are like other home equity loans--they let you cash in on part of the value a home has built up over the years. But the FHA reverse mortgage is unique because FHA borrowers don't make any payments on FHA HECM loans until they stop using the home as their principal residence. There are no mortgage payments due until you stop using the home as a primary residence.

Since a "principal residence" is defined as the place where the borrower does the majority of their dwelling, using summer homes, time shares or RVs doesn't disqualify you from an FHA HECM loan. As long as you meet the requirements for an FHA HECM loan and use the property as your main address, you can take the cash value of your home's equity to use in any number of ways.

QUALIFYING FOR FHA REVERSE MORTGAGE OR HECM LOANS

To qualify for an FHA reverse mortgage, you must be at least 62 years old. You must own your home, or have a low enough balance that the FHA reverse mortgage loan will pay off the outstanding amount when the HECM loan is approved. Like other FHA loans and FHA mortgages, the property must be either a single-family residence or a one to four unit property where the borrower occupies one of the units.
Condos and manufactured homes qualify, but only if they meet FHA requirements.

FHA reverse mortgages are also different than conventional reverse mortgages or HECM loans because the borrower is required to get financial counseling from an approved HECM counselor. This is a condition of the loan and is non-negotiable. The Department of Housing and Urban Development recommends searching for an approved counselor by calling the Housing Counseling Clearinghouse at 1-800-569-4287.

NON-FHA HOMES

It doesn't matter if you purchased your home with a conventional loan or an FHA mortgage. As long as you meet FHA and HUD requirements for approval, you can use an FHA reverse mortgage to claim the cash value equivalent for the equity in your home.

One of the conditions of the FHA reverse mortgage is that you aren't allowed to owe more than the home is worth. The amount of your loan is determined by interest rates, your credit report, and by the appraised value of the property. If you are approved for an FHA reverse mortgage or HECM, you must pay off any remaining balance at closing time on your new loan. As with any other FHA home loan, you are still responsible for paying property taxes, insurance, and related bills.

Like other FHA mortgage products, your application must be made through an FHA approved lender. If your current financial institution does not participate in FHA loan programs, look up the local FHA-approved banks in your area to get started.

FHA NEWS and RELATED ARTICLES

One type of question that sometimes arises about FHA loans-- Is there a no-credit-check version of an FHA mortgage loan? What is the criteria required for FHA loans that do not require a credit check and/or appraisal?

One not-so-common question about FHA loans still comes up often enough to discuss in detail. Some FHA loan applicants want to know if they can purchase a residence from another family member using an FHA insured mortgage.


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Reverse mortgages for seniors over 62

2002-10-04 12:42:16 by RMdude

Know any senior citizens who might lose their home due to crappy economy and massively declining pension/savings income? The HUD/FHA guarantees loans for senior homeowners over the age of 62. There are three lenders (primary) Financial Freedom, Wells Fargo, and Seattle Mortgage. Each county has a different maximum amount that FHA/HUD allows. The age of the youngest (over 62) homeowner is factored against the maximum for the county to determine the principal amount to be borrowed. The loan points, FHA insurance, and closing costs are subtracted and the balance is available for monthly payments for life, a line of credit and/or lump sum distribution


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