Articles Tagged With: FHA Reverse Mortgage

What happens to my FHA loan in a natural disaster?

May 25, 2016

FHA Reverse Mortgages: Payout Options

Recently we wrote about proposed changes to strengthen the FHA Reverse Mortgage loan program and about basics of the FHA Reverse Mortgage program. We left off with a promise to discuss how the reverse mortgage, also known as an FHA Home Equity Conversion Mortgage (HECM), pays out once the loan has closed. A HECM borrower’s payout (also known as a disbursement) depends on the nature of the HECM loan. The rules for cash back to the borrower differ based on whether the borrower has a fixed interest rate HECM loan or an adjustable rate HECM. The FHA/HUD official site states that borrowers who have adjustable rate HECM loans are eligible for the following payment options: Tenure-equal monthly payments as long as at least one borrower lives and continues to occupy | more...

May 19, 2016

What is an FHA Reverse Mortgage?

By Joe Wallace

In a recent blog post we wrote about the steps the FHA and HUD are taking to further improve the FHA Home Equity Conversion Mortgage (HECM) loan program. The FHA HECM, also known as a reverse mortgage or FHA reverse mortgage, is a different type of home loan than a typical “forward mortgage” for a new purchase or refinance on a previous mortgage. The FHA reverse mortgage or HECM is for qualified borrowers age 62 or older who either own their property outright (with the mortgage paid off in full and documentation of that paid-in-full status) or are very close to paying off the current loan. According to the FHA official site, HECM loans are a “…special type of home loan that lets you convert a portion of the equity | more...

January 21, 2016

Qualifying For An FHA Reverse Mortgage

By Joe Wallace

One commonly asked question about the FHA home loan program is whether or not FHA insures or guarantees reverse mortgages. The FHA does have a reverse mortgage loan program, called the Home Equity Conversion Mortgage or HECM for short. Who qualifies for an FHA HECM loan and what are the basic ground rules? To start, it’s very important to understand the difference between an FHA HECM loan and traditional refinancing. According to the FHA official site, “A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.” FHA HECM loans are not like standard home equity loan or second mortgage | more...

January 14, 2016

FHA HECM Loan Facts

By Joe Wallace

The FHA single-family loan program includes reverse mortgages–a loan program where a borrower can apply for a loan that requires no monthly payments, offers cash back to the borrower, and is based on the value and equity in the home. If you are looking for a reverse mortgage, the FHA program might be just what you need. Here are some basic facts about the FHA reverse mortgage loan option: FACT: FHA reverse mortgages are known as Home Equity Conversion Mortgages or HECM for short. These two terms refer to the same thing when it comes to FHA reverse mortgages. FACT: FHA HECM loans are for borrowers aged 62 or older who either own their home outright or are very close to doing so. HECM loans are declared due when the | more...

January 13, 2016

FHA Refinance Loan Facts And Fictions

By Joe Wallace

If you are thinking about your refinance loan options in 2016, now is a good time to review some FHA refi facts. Planning for an FHA refinance loan is important, and if you start early the same way as preparing for the original purchase of your loan you may save yourself valuable time later on in the process. It’s important to take enough to time to review your recent credit history, make sure you have no late or missed payments in the 12 months leading up to the loan application, and make sure there are no errors or evidence of identity theft on your credit report. Here are some basic facts–and fictions–about FHA refinancing: FACT: FHA refinance loans are available for existing FHA loans and non-FHA mortgages alike. You can | more...

January 12, 2016

FHA Loans: Fact Versus Fiction

By Joe Wallace

FHA loans are available for a wide variety of purchases. Did you know that FHA mortgages are offered for town homes, condo units, mobile homes, and many other types of properties? There are some facts you should know about FHA mortgages as well as some fictions to avoid. Here are just a few: FACT: FHA loans are for most types of single-family residence classified as “real property”. That means homes that are (or will be) permanently fixed to a foundation that meets state/local building code and FHA minimum standards. Mobile homes, manufactured homes, modular housing and other types of homes may qualify if they meet FHA standards. However motor homes, houseboats and other types of vehicles that cannot be fixed to a permanent foundation will not qualify for an FHA | more...

September 28, 2015

FHA HECM Loans and Death Of The Primary Borrower

By Joe Wallace

We get many questions about FHA HECM loan rules. Some of those questions have to do with the legal rights and/or obligations associated with HECM loans for primary borrowers and what happens to the non-borrowing occupant if the borrower dies (in terms of ownership and occupancy of the property). Here’s a recent question that showed up in the comments section: “Several years ago my father and I took out a Reverse Mortgage on our home. He had to be the primary borrower because of his age and I was and still am not 62. I am a co-owner of the house and my name is on the deed. I had to go through the counseling and I had to sign all papers that he signed. My question is when something | more...

August 3, 2015

FHA Reverse Mortgages and the FHA Back To Work Progam

By Joe Wallace

A reader got in touch with us recently about the FHA’s Back To Work program, which was announced in 2013 as a way for lenders to offer FHA mortgage loans to people who have had financial hardship in the past that might otherwise disqualify them from a home loan. Back To Work requires the borrower and lender to work together to document the causes of a pre-foreclosure sale, foreclosure, bankruptcy or other financial hardship to show that the issue was circumstantial and not representative of a borrower’s actual credit worthiness. The following guidance to lenders is from FHA Mortgagee Letter 13-26: “As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost | more...

When Is An FHA Loan Better Than A Conventional Loan?

July 14, 2015

FHA Refinance Loans: With Appraisal Or Without Appraisal?

By Joe Wallace

For borrowers examining their refinance loan options, it’s important to know what kind of refinance loan you want so you can plan ahead for expenses that might be related to the loan such as appraisals and up-front closing costs. Some borrowers assume that certain types of refinancing never require an appraisal, but this is not true–FHA loan rules for Streamline Refinancing, for example, say that no appraisal is required by the FHA but the lender may ask for one regardless. This surprises some applicants, and we get a fair number of inquiries asking if certain lender policies (including “appraisal required” streamline loans) are legitimate. “My understanding is that the FHA rules don’t require an appraisal for this refinance loan. My lender says I will need one for my streamline refinance | more...

July 10, 2015

FHA Loans and Counseling Services: The Rules

By Joe Wallace

There are some cases where a borrower may seek out housing counseling on their own, and others where the applicant is required to do so as a condition of FHA loan approval. FHA foreclosure avoidance programs may require housing counseling, HECM loans definitely require the applicants to get required counseling sessions, and borrowers may choose a pre-purchase counselor based on a referral from the FHA/HUD. In some cases, such as with foreclosure avoidance, the counseling is free. In other cases there may be fees associated with the sessions that the borrower is expected to pay for. In such cases, the FHA loan program has rules that dictate how the counseling is to be carried out, how the billing is to be done, and what services the borrower must get from | more...