How Does a Reverse Mortgages Work?

With regular mortgage, you make monthly payments to the lender. With reverse mortgages, you receive money from lenders. For more info call us 818 987 2760

In order to determine how much you can borrow with a Home Equity Conversion Mortgage (HECM), it is best to use a HECM Calculator. If you want to stop making mortgage payments, a Home Equity Conversion Mortgage (HECM) allows you to keep your home and stop paying your mortgage, but you will need a substantial amount of equity to qualify.  If you have an exiting mortgage, reverse mortgage calculators take into account how much you currently owe for your loan and the value of the house.  You will also need to factor in current mortgage rates with a Home Equity Conversion Mortgage (HECM).  Some loans have fixed rates, some are variable.

When you apply for a Home Equity Conversion Mortgage, the amount that you can borrow depends on your equity.  If you own your home free and clear, you will be able to borrow more than if you now have an existing mortgage.  Making a decision to obtain a Home Equity Conversion Mortgage (HECM) should involve your heirs, and you should discuss any potential disadvantages such as their reduced inheritance and their desire to keep the home in the event of your death.  Baby boomers are now “Generation Mortgage,” with less savings for retirement and increased medical costs for long term care, your home may provide you the financial security that you need to make the years ahead less stressful.

What is a HECM Loan?

There are 3 types of Reverse Mortgages loan available.  Home Equity Conversion Mortgages are now the most popular reverse mortgages.  Home Equity Conversion Mortgages allow you to stop making monthly payments and to remain in your home.  There are no restrictions on how to use the money from Home Equity Conversion Mortgages, but there are loan limits put in place by the FHA and only certain individuals qualify.

Single purpose reverse mortgages and proprietary reverse mortgages are not the same as Home Equity Conversion Mortgages.  A single purpose reverse mortgage is generally used for a specific purpose, such as home improvements.  There are strict limitations regarding use of funds for a single purpose reverse mortgage.  A proprietary reverse mortgage is generally used for large loan amounts that exceed FHA limits.  Proprietary reverse mortgages are preferred for those individuals who want to borrow as much as possible, without FHA restrictions.

Home Equity Conversion Mortgage (HECM) Loan Benefits .

You can borrow a large sum of money without having to pay taxes and without having to make a monthly payment for the loan.  At the same time, you can stay in the home and retain title in your name until you decide to sell or move; or in the event of death, a decision may be made to pay off the loan and retain the home for your estate.  The HECM Program also allows you to move to a nursing home and retain title for up to 12 months before making a decision about selling the home or paying back the loan.

The FHA has set limits for the maximum amount that you can borrow with a Home Equity Conversion Mortgage (HECM).  There are also guidelines in place that make it necessary for you to qualify and go through counseling before obtaining a Home Equity Conversion Mortgage.  Most HECM lenders have similar qualifying guidelines, but we are here to help you navigate the process and answer your questions.  If you want to know more about HECM Reverse Mortgages, the best thing to do is pick up the phone and talk to us today. There is never a charge for information and assistance, so don’t hesitate to learn more and see if this makes sense for you.

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