If you are interested in a reverse mortgage there are a few basic things you should know first beforehand. First, you should know that a reverse mortgage is also known as a Home Equity Conversion Mortgage, abbreviated as HECM, pronounced “heck-um”. The reverse mortgage is for homeowner’s 62 or older who have a mortgage on their home or own their home free and clear. Here are five other basics of a reverse mortgage for you to know.
The process is easy – One Reverse Mortgage has an easy five step process. When you work with One Reverse Mortgage you will have a licensed expert helping you through each of the five steps which include:
- Making the first call to discussion your financial situation to determine if a reverse mortgage is right for you.
- Complete the application and counseling process.
- Appraisal of your home.
- Closing of your loan and the disbursement of the funds.
- Repayment of the loan once the last remaining borrower no longer lives in the home.
You have loan options – The reverse mortgage offers three different loan options which include:
HECM Fixed – The HECM Fixed rate option is designed for people requiring a greater amount of money available to them to pay for mandatory obligations like their current mortgage balance, property liens, repair requirements and reverse mortgage loan closing costs. You will receive your money in one lump sum at closing and the low fixed rate remains the same through the life of the loan.
HECM Line of Credit – The HECM Line of Credit rate reverse mortgage is available to everyone that qualifies and offers different ways to receive money available to you. One option offers lower closing costs by limiting your initial money disbursement for the first year based on the FHA pre-determined limit. Other options include receiving your money in smaller amounts monthly, a full draw on your line of credit at closing, accessing your line of credit when you need to or any combination of these. Another great benefit of this option is your unused line of credit may grow over time.
HECM for purchase – Currently, One Reverse Mortgage is offering a HECM for purchase in a few states. A HECM for Purchase allows you to finance the purchase of a home using a reverse mortgage. There are no monthly mortgage payments. This option gives seniors the chance to find a home that meets their needs or move closer to family. Please contact a reverse mortgage expert for more information on the HECM for Purchase loan program. To find out which states we are currently offering the HECM for purchase please give us a call.
Counseling is required – Part of the reverse mortgage process is to attend a third party counseling session with a HUD approved counselor. During this hour long session the HUD approved counselor will review your financial options with you. This counseling session ensures that you are aware of all of your financial options before you start the process.
Government insured loan – The HECM program is insured by the U.S. Federal Government. The Federal Housing Administration (FHA) insures these loans. The HECM is a non-recourse loan which means that if you owe more than the home is worth when the loan comes due, an FHA managed mortgage insurance fund will cover the difference.
The reverse mortgage does not affect SS – The reverse mortgage does not affect your Social Security, Medicare or pension benefits. However, it can affect Medicaid and Supplemental Security Income. Consult your financial advisor to be sure your benefits are not affected.
You can leave your home to your heirs – Your heirs have three options with your home once you are no longer living in your home. Those options are:
- Your heirs can sell the property
- Your heirs can keep the home
- Your heirs do not have to be responsible for the home
To read more about those three options you can read our blog post, Reverse Mortgage and Your Heirs, to find about the full details.
If you are interested in the reverse mortgage loan, or if you just want to learn more give us a call. We can answer your questions. We can even give you a reverse mortgage review with no obligations. Remember the first step is giving us a call.