Home equity conversion mortgage also referred to as HECM, is essential for senior homeowners. A look at HECM mortgages and how they function discloses how obliging they can be to homeowners. But what are the HECM requirements? To qualify for this loan, you will need to meet some requirements. Here is a look at the requirements of the Home Equity Conversion Mortgage.
Basics of HECM
HECM are mortgages covered under the Federal Housing Administration’s reverse mortgage program.
This reverse mortgage lets proprietors borrow some equity from their primary homes. Senior homeowners can use the free home appraisal to access their equity value. So, while senior homeowners might not have sufficient funds to cater to their expenses, they have a home. The home has built up equity throughout long-term ownership. It is this equity that reverse mortgage converts to provide accessible funds for the homeowners. These funds can help senior homeowners to meet their needs after retiring. Whether it is paying off credit card debt, reinforcing savings account, medical emergencies, or educating grandchildren, the reverse mortgage loan has no restrictions.
What are the HECM requirements?
Similar to a traditional mortgage that emphasizes income and down payment; senior homeowners need to meet specific requirements to get an HECM loan.
However, the reverse mortgage has a distinct borrowing criterion from that of traditional mortgages.
To qualify for a HECM loan, the borrower must be 62 years or over owning a home or have a significant amount of mortgage equity.
Secondly, the home must be the primary residence of the borrower.
More so, the borrower should not have delinquent federal loans such as students’ loans and meet the financial assessment requirements as set by the lender.
All borrowers are also required to participate in a counseling session approved by the Department of Housing and Urban Development to advise them in their decision making about taking an HECM loan. The counseling aims to let you understand your obligations if you apply and receive the reverse mortgage loan.
HECM Home Eligibility
Regardless of your location in the US, any homeowner who is 62 years and above can apply for an HECM loan.
Second homes and vacation homes do not qualify for reverse mortgages.
Even so, manufactured homes and condominiums may be eligible for HECM loans if they meet the FHA requirements.
However, a residence must be 1-4 to be eligible for the credit.
Although the loan does not have monthly repayment fees, homeowners should know that they are required to still pay homeowners association fees such as insurance and property taxes.
How to Recompense a HECM Loan?
Home Equity Conversion Mortgage does not need to be repaid if the homeowner stays in the primary residence and meets continuing mortgage requirements. But in an incident where the borrower stops residing in the home by moving out the HECM loan becomes due. At this point, the borrower or heirs can use any proceed to pay off the mortgage or decide to sell the home to repay the loan. The good thing is that FHA insurance protects borrowers by making sure they or the heir will not repay an amount that is more than the home worth at the tie of selling it. Borrowers can use free home appraisal sites to know their home value when selling it. Find out more here https://blakemortgage.com