Products

HECM for Purchase (H4P):

Instead of eliminating debts, paying for healthcare or covering daily living expenses, you can also use a reverse mortgage to purchase a new home that better suits your needs.

The advantage of using HECM for Purchase is that the new home is purchased outright, using funds from the sale of the old home, private savings, gift money and other sources of income, which are then combined with the reverse mortgage proceeds. This home buying process leaves you with no monthly mortgage payments.

FHA HECM Reverse Mortgage Programs

The HECM reverse mortgage program is backed by HUD (The U.S. Department of Housing and Urban Development) and insured by the FHA. To be eligible for a HECM, FHA states that you must be sixty-two years of age or older, and either own your home free-and-clear or have a low enough balance that the loan can be paid off with a reverse mortgage. Also, you and any co-borrowers must live in the home as your primary residence. 1-4 unit properties, HUD approved condominiums, and a limited number of manufactured homes may qualify if they meet FHA’s requirements.


HECM for Refinance:

Adjustable Rate options:

Line of Credit:

More than 90 percent of reverse mortgage borrowers establish a standby line of credit that they access only when funds are needed. You can access your funds by submitting a written request to the company servicing your loan.

The line of credit has a growth feature, which means that the unused balance grows over time. This is not the same as earning interest. Instead, the growth feature takes into consideration that you are one year older and that your home has appreciated in value.

Term Payment:

This option provides borrowers with fixed monthly payments for a specified amount of time. If, for example, you are 67 and want to defer going on Social Security until age 72 (thus giving you the maximum payout benefit), you can establish term payments for five years. The amount you receive each month will not change, even if your home decreases in value over the five years.

Tenure Payment:

This option provides borrowers with fixed monthly payments for as long as you live in the home as a primary residence. Even if the loan balance exceeds the value of your home, you will still receive the same monthly payment. The payments will only stop when you pass away or permanently leave the home.

Modified Term/Line of Credit:

This option lets you establish a line of credit and receive fixed monthly payments for a specified amount of time.

Modified Tenure/Line of Credit:

This option lets you establish a line of credit and receive fixed monthly payments for as long as you live in the home.

Single Disbursement Lump Sum:

To help preserve your home equity, a borrower can take a lesser amount of funds than he or she may qualify for.

Fixed Rate Options:

Single Disbursement Lump Sum:

To help preserve your home equity, a borrower can take a lesser amount of funds than he or she may qualify for.

For example, if the borrower is eligible for a $100,000 loan, but only needs $30,000 to fix the roof, they can take the lesser amount. A one-time lump sum payment is made to the borrower.

The one drawback is that if you want more money at a later time, you will have to refinance and get a new reverse mortgage and pay closing costs all over again.

FHA Reverse Mortgage Program Highlights (HECM reverse mortgage):

  • Backed by HUD
  • Insured by Federal Housing Administration (FHA)
  • No repayment required as long the homeowner lives in the home
  • Remaining value goes to survivors
  • No income or minimum credit score qualifications required
  • Payments can be made in one lump sum, on a monthly basis for a specific amount of years, monthly income for life (Tenure Payment) left in a line of credit and grow in value, or a combination of any of these
  • Size of loan determined by borrower’s age, interest rate, and the value of the property
  • No limits on value of property. However, the entitlement amount will be capped by the FHA ceiling for designated area
  • A reverse mortgage is what we call a non-recourse loan. This means that with a reverse mortgage you are not personally liable. The liability is only to the extent of the value of your home at time of sale, death or vacating the premises as your permanent residence. Your heirs are not personally liable; they can either sell the home at time of your death or keep the home and pay off the remaining balance of the Reverse Mortgage.

Please keep in mind that the reverse mortgage industry in constantly changing and some of the information contained on this site may not be current. Please ask a licensed reverse mortgage professional for up-to-date guidelines. .


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