Westerman Mortgage: About HECM reverse mortgages
What is a HECM reverse mortgage?
Home Equity Conversion Mortgages, also known as reverse mortgage loans, were created more than 25 years ago to help Americans age 62 and older convert a portion of their home equity into tax-free money. HECM reverse mortgages are insured by the Federal Housing Administration and allow seniors to age in place and achieve retirement security.
How does it work?
A reverse mortgage loan allows you to turn some of the equity in your home into cash to improve your lifestyle in whatever way you choose. You will continue to live in your home, retain ownership and will not be required to make any monthly mortgage payments during the loan period. Instead of repaying the loan monthly, the loan balance is repaid when all borrowers have left the home. You will be required to pay for property taxes, home insurance and home maintenance.
How do you qualify?
The borrower on title must be 62 years or older (a nonborrowing spouse may be under age 62). The home must be the borrower’s primary residence. The borrower must own the home (the borrower must meet the financial requirements of the HECM Program).
How much money can I receive?
The older the borrower(s), the more funds may be available. The higher the appraised home value, the more funds may be available. The lower the interest rate, the more funds may be available to the consumer.
What are some common uses of a reverse mortgage?
Pay off an existing mortgage and eliminate monthly mortgage payments. Make retirement savings last longer. Use a “standby” HECM reverse mortgage growing line of credit to preserve investment accounts during market downturns or build a safety net for unplanned emergencies, home repairs and health care expenses. Supplement your retirement income with monthly payments. Use a HECM for a purchase loan to buy a home that better fits your needs. Support aging in place expenses, like caregiving and home modifications.
What are some of the advantages of a HECM reverse mortgage?
Some of the advantages include no monthly mortgage payment, tax-free proceeds, keep your home, the loans are federally insured by the U.S. government, and you may want to delay receiving your Social Security benefits.
What are some consumer safeguards?
A number of consumer safeguards have been established to protect reverse mortgage borrowers. These protections ensure lenders like Westerman Mortgage are doing their jobs right, and that borrowers and their family have a thorough understanding of how a reverse mortgage works.
The following consumer safeguards were instituted for your benefit: No Prepayment penalty, non-recourse loans in that you never owe more than what the house is worth at the time the loan is paid back, all reverse mortgage applicants undergo independent, third-party counseling prior to application commission, HUD-established principal limits on the amount of money you can borrow during the first year of your loan.
This may ensure home equity proceeds last longer, financial advisers are including the reverse mortgage growing line of credit as part of their clients’ long-term retirement planning strategies, helping stretch other investments even longer into retirement, and HECM origination fees are regulated by HUD. Other HECM reverse mortgage costs may vary among creditors and loan types.
Let us show you how to convert a portion of your largest asset — your home equity — to fund your retirement needs. Contact the Westerman Mortgage office today for a free, indepth, consultation and determine if this product might fit your future needs. Westerman Mortgage is located at 1401 Malvern Ave., Suite 110. For more information, call 501-781-0028 and ask for Gary Westerman.