Articles Tagged With: FHA Reverse Mortgage

Rehab Refinance Loans, reverse mortgages

July 23, 2024

Pros and Cons of Refinancing Versus Reverse Mortgages

As we age, sound financial decisions become increasingly crucial. For many seniors, leveraging home equity is a key consideration, and there are two important options to know in this area. Two FHA loan products can help you access home equity. One has an age requirement (the reverse mortgage) and one does not (refinancing.) Those two options are FHA reverse mortgages and FHA refinancing. Each option has its pros and cons, which is vital for making an informed decision. Reverse mortgages offer seniors a way to boost monthly cash flow. They eliminate required monthly payments, providing significant financial flexibility. Additionally, they offer lump-sum payouts, which can help cover home repairs, medical expenses, or other significant costs. However, reverse mortgages have drawbacks. The most notable is the gradual depletion of home equity. | more...

July 15, 2024

Understanding the Costs of an FHA Reverse Mortgage

By Joe Wallace

An FHA reverse mortgage, or Home Equity Conversion Mortgage (HECM), can provide financial flexibility for qualifying homeowners aged 62 or older, but it’s crucial to understand the associated fees and expenses. If you meet the HECM age requirement and either own your home outright or are very close to doing so, what follows will be helpful for you. Primary Costs When considering an FHA reverse mortgage, you should be prepared to pay several key costs: FHA mortgage insurance, interest fees, lender’s fees, and potential service charges are among them. FHA mortgage insurance premiums consist of an initial 2% charge, followed by annual premiums of 0.5% of the outstanding loan balance. The FHA does allow borrowers to finance the upfront mortgage insurance premium as part of the loan. Additional Expenses In | more...

July 9, 2024

Home Equity Loans: The FHA Reverse Mortgage

By Joe Wallace

The FHA Home Equity Conversion Mortgage (HECM) loan is a home equity loan option for qualifying borrowers 62 or older. There are no monthly payments on an FHA HECM. The borrower can get cash back on the transaction, and the loan is typically due in full when the borrower dies or sells the home. Qualifying HECM borrowers are, once their loan application is approved, able to withdraw “a portion of your home’s equity to use for home maintenance, repairs, or general living expenses,” according to the FHA and HUD official site. You can also apply for an FHA reverse mortgage to purchase a primary residence, but you must use your own cash to make up any difference between FHA HECM funds, the sale price, and any associated closing costs. HUD.gov | more...

July 17, 2023

How To Get Cash Out Of Your Home

By Joe Wallace

When you buy a house with an FHA loan, you start building equity with your 3.5% down payment. Once you begin making FHA loan mortgage payments, you continue to build equity in your property over the lifetime of the mortgage. But how do you take equity out of your home? We explore some important options below. Home Equity Loans And Home Equity Lines Of Credit The FHA does not offer a home equity line of credit, this is an option available from many conventional lenders and offers you a line of credit using your house as the collateral. The closest an FHA mortgage gets to a home equity loan is the FHA Cash-Out Refinance loan, which does tap into the unused equity in your house. FHA Cash-Out Refinance Loans FHA | more...

December 4, 2020

2021 FHA Home Equity Conversion Mortgage Loan Limits

By Joe Wallace

The Department of Housing and Urban Development has published FHA loan limits for the FHA Home Equity Conversion Mortgage (HECM) loan program for 2021. Home Equity Conversion Mortgages, also known as FHA Reverse Mortgages, are offered to financially qualified borrowers age 62 or older who either own their homes outright or are very close to doing so. FHA HECM loans feature no monthly payments; the borrower receives cash from the loan based on terms negotiated with the participating lender; the loan is normally due when the borrower dies or sells the home. The loan may also be declared due in full if the borrower quits using the property secured by the HECM loan as their primary address. Borrowers are required to use escrow to pay property taxes and must follow | more...

November 4, 2020

Do I Need To Use An Escrow Account For My Home Loan?

By Bruce Reichstein

An escrow account is a tool you and the lender can use to simplify mortgage payment issues with respect to property taxes, homeowner insurance, and other payments. Depending on the nature of your mortgage your lender may require the use of escrow, especially if you are applying for a One-Time Close construction loan or an FHA 203(k) Rehabilitation loan or 203(k) refinance loan. Escrow accounts make it possible for some hands-off payments for property taxes and other expenses. Escrow may be required by law depending on the state you’re buying in and the circumstances of your loan. Escrow accounts may be referred to as impound accounts and if you are putting a fixed amount of money into escrow each month (via your mortgage payment), your lender is basically letting those | more...

June 4, 2020

Reverse Mortgage And Foreclosure Relief Scams: What You Need To Know

By Bruce Reichstein

Mortgage scams and reverse mortgage scams involve people coming to you with offers to save you from a pending foreclosure, or offer you a reverse mortgage to help cash in on the equity you have built up in the home. But scammers aren’t there to help, they are there to profit from your problems; fortunately, there are ways to tell if you are being scammed and stop a con game dead in its’ tracks. Advice About Scams From The U.S. Government The Department of Justice offers advice about scams–have you been contacted by third party agencies without having contacted them first? What should you do to prevent being taken advantage of if you need foreclosure relief, or need a home equity loan or reverse mortgage? The first step–identifying the biggest | more...

June 26, 2019

Who Can Apply For An FHA Reverse Mortgage?

By Bruce Reichstein

Borrowers who want to pull cash out of their home, converting value into cash back, have two basic options with an FHA-guaranteed loan. One of those options is the FHA Reverse Mortgage, also known as a Home Equity Conversion Mortgage. This is for borrowers who either own the home or are very close to paying off the mortgage loan on the property. FHA HECM mortgages allow for cash back with no monthly payments required since the loan is paid off when the borrower dies, or sells the property. Does this sound like an option you would like to explore? There is one very important caveat with FHA Reverse Mortgages-they are not available to borrowers under the qualifying age, which is 62 or older. That is why your lender may try | more...

December 6, 2018

Are FHA Cash-Out Refinance Loans The Only Option For Older Home Owners?

By Joe Wallace

There are many kinds of homeowner; there’s the young couple just starting out looking for their first home, there are mid-career professionals who need to relocate or upsize their living conditions, and there are older home owners looking to cash in on equity they have worked hard to build up in the home. What kind of FHA loan options are open to the older home owner who wants to keep their home but cash in on the increased value of their property? FHA Cash-Out Refinance Loans For Older Home Owners Before we start discussing the FHA cash-out refinance loan option for seniors, it’s important to point out that FHA cash-out refinance loans are for any financially qualified borrower; these loans are NOT restricted to older home owners. FHA cash-out refi | more...

October 25, 2018

FHA Reverse Mortgage Policy Changes Explained

By Bruce Reichstein

In a recent blog post we discussed recent changes to FHA Reverse Mortgage loan policies. Here are some explanations of some of those policy changes and how they affect mortgage loan processing for FHA Home Equity Conversion Mortgages, also known as reverse mortgages. Evidence of Current Hazard Insurance FHA reverse mortgages require the lender to verify the existence of hazard insurance where required and to make sure that insurance is current, not delinquent. According to the 2018 HECM policy updates, participating FHA lenders who issue reverse mortgages are now allowed to accept alternative documentation of hazard insurance: “In lieu of a current hazard insurance declaration page, HUD will accept a document from the hazard insurance provider (i.e., hazard insurance company underwriting the property and responsible for paying a claim) on | more...