January 21, 2016
In our last blog post we discussed some of the basics about the FHA reverse mortgage loan program known as the Home Equity Conversion Mortgage. Here are some commonly asked questions about the program and the answers you should know:
What Are The Property Requirements For An FHA Reverse Mortgage?
According to the FHA official site, properties eligible for an FHA reverse mortgage must meet all FHA property standards and flood requirements. The eligible property types are:
–Single family home or 2-4 unit home with one unit occupied by the borrower
–HUD-approved condominium project
–Manufactured home that meets FHA requirements
Are Manufactured Homes Eligible For FHA Reverse Mortgages?
As mentioned above, FHA loan rules do technically permit HECM loans for mobile homes. However the participating lender may or may not offer HECM loans for manufactured housing. You will need to find a lender willing to offer a reverse mortgage on the property you own.
What Is The HECM Loan Amount Maximum?
According to FHA.gov, the answer to this question depends on the following:
–Age of the youngest borrower or eligible non-borrowing spouse
–Current interest rate; and
–Lesser of appraised value or the HECM FHA mortgage limit of $625,500, or the sales price
How Are HECM/Reverse Mortgage Funds Paid Out?
FHA.gov states that the HECM loan funds disbursement program depends greatly on the type of HECM loan you apply for–fixed interest rate or adjustable interest rate. For fixed interest HECM or reverse mortgages, FHA loan rules permit the Single Disbursement Lump Sum payment plan for fixed interest rate FHA HECMs.
For adjustable rate HECMs, FHA loan rules permit the following:
–Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
–Term – equal monthly payments for a fixed period of months selected.
-Line of Credit – unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.
–Modified Tenure – combination of line of credit and scheduled monthly payments for as long as you remain in the home.
–Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
Talk to a lender about your HECM loan options, whether you are old enough to qualify for the application, and what it takes to get started.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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