The home equity conversion mortgage, HECM, is a mortgage loan, with which a home owner can convert a part of the home equity into cash money. There is no monthly back payments, but the capital, interests and other costs will be paid back, when the last owner moves permanently away and the home will be sold.
1. Who Can Qualify For The Home Equity Conversion Mortgage, HECM?
You must be American, age 62 or over and own a home, where you live permanently. You either own the home outright or there is a low mortgage balance. You have also to meet the home equity conversion mortgage counselor, who can give a detailed information and to take account your special requirements.
If your present mortgage is not from the Federal Housing Administration, you can still qualify for their home equity conversion mortgage. The single family home or max 4 unit home with one unit occupied by the borrower are eligible home types.
2. What Is The Difference Between The Home Equity Conversion Mortgage, HECM, And The Usual Bank Loan.
There are big differences. First, to be able to get the home equity conversion mortgage, you must be age 62 or over and own a home, where you live permanently. On the other hand, the lender will not ask your credit information, nor your monthly income, because the loan will be taken against the home equity.
And, this is important, there is no monthly back payments. The lender pays you every month. With the home equity conversion mortgage,HECM, from the Federal Housing Administration you cannot be foreclosed or forced to vacate your home, because you missed the mortgage payment.
Of course you have to keep the home in a good shape, to pay the taxes and insurances, because you are the owner.
3. How Do I Get The Money And How Much?
Principally the older you are, the higher the appraised value of your home is, the lower the interest rate, the more you can borrow.
Actually you decide, how the lender pays to you. The alternatives are as a lump sum, as monthly payments, as a credit line or as a combination of these. As said earlier, there is a compulsory meeting with the counselor, who is officially approved.
This is for your benefit. The home equity conversion mortgage includes lots of benefits and small things, like tax influences, so I honestly recommend that you will take all the benefits from this meeting. It is useful to prepare a question list before you go into the counselor meeting.
Another thing, which you could do, is to negotiate with your relatives and spouse. The Internet offers lots of useful information and there are many reverse mortgage blogs, where seniors exchange opinions and experiences about these loans. Jump in and participate!