If you are a homeowner with age 62 years or older, have paid off your mortgage or paid down a considerable amount, and are currently living in the home, a Reverse Mortgage may be a suitable option for you. This special type of home loan lets homeowners convert a portion of their home equity into cash without selling the home, giving up title, or taking on a new monthly payment. The money from the reverse mortgage provides seniors with the financial security they need to fully enjoy their retirement years.
You can also use a reverse mortgage to purchase a primary residence if you are able to use cash on hand to pay the difference between the reverse mortgage proceeds and the sales price plus closing costs for the property you are purchasing.
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Unlike a traditional mortgage that you pay back each month, a reverse mortgage makes payments to you. You can get these payments in a lump sum to cover an unexpected bill, or as a regular supplement to your monthly income, or at intervals and amounts that are best for you.
We offer reverse mortgage loans that require no repayment as long as your home is your principal residence and you fulfill the borrower's obligations, such as continuing to maintain the property and paying your property taxes and hazard insurance. You pay the money back plus interest and other charges when you sell or permanently move out of your home.
If you pass away, the loan is due, but the amount due will always be the lesser of your loan balance or the market value of your home. Even if the amount you borrowed eventually exceeds the value of your home, you or your heirs will never owe more than the value of your home. All proceeds in excess of what you owe belong to your estate, which means the remaining equity in your home can be passed on to your heirs.
Unlike the loan balance of a conventional mortgage, which becomes smaller with each monthly payment, the loan balance of a reverse mortgage grows larger over time.
As you receive your payments, your equity - the amount of cash you have left after selling and paying off the loan generally grows smaller. But with a reverse mortgage you can never owe more than your home's value at the time the loan is repaid
If you own your home free and clear or if you have very little mortgage principal outstanding, a reverse mortgage may be a good option for you.
Home Equity Conversion Mortgage (HECM) is one type of reverse mortgage regulated by HUD. It allows a homeowner to convert a portion of the equity in his/her home into cash. Unlike a traditional home equity loan, the borrower is not required to make repayment as long as he/she occupies his/her home as the principal residence and fulfills obligations, such as continuing to maintain the property and paying property taxes and hazard insurance.
There are many advantages of HECM reverse mortgage and we will name a few in the following:
All the borrowers on the title must be at least 62 year of age.
HUD requires that all HECM borrowers must receive counseling from a HUD-approved counseling agency. The objective of the counseling session is to educate you about the features of reverse mortgage, the appropriateness of a reverse mortgage for your personal and financial situation, other financial options that might meet your needs, and to provide you with the guidance and resources to make an informed decision.
Yes, as long as the appraisal shows that your home meets HUD's minimum property standard.
Your home can be a single-family residence, a one-to-four unit building with one unit occupied by the borrower, a manufactured home (must have permanent foundation and must be installed), a unit in an FHA-approved condominium, or a unit in a PUD project.
Yes. However, if you need to be hospitalized or moved into a health facility, you may be absent from your home as long as you provide the appropriate notification as required by HUD and FNMA**.
**Fannie Mae® is a registered trademark of Fannie Mae.
No, you will NEVER have to make any monthly payment on your home anymore since Sun West will pay off your existing home loan out of the new HECM loan proceeds.
No, a home that has an existing lien will qualify for a HECM loan as long as the proceeds of the loan are large enough to pay off existing mortgage(s) on your home. If the proceeds of the loan are not sufficient to payoff the existing liens, HECM may not be for you unless you have sufficient assets to payoff the difference in amount.
With a traditional home equity loan, you must qualify for the loan and you are required to make a monthly mortgage payment. With HECM, you do not have to make any mortgage payments. This loan is primarily based on the age of the youngest borrower or eligible non-borrowing spouse, current interest rate, and lesser of the appraised value the FHA mortgage limit and the sales price (for HECM Purchase loan).
Money available to you through a HECM depends upon the age of the youngest borrower or eligible non-borrowing spouse; current interest rate; lesser of the appraised value; the HECM FHA mortgage limit and the sales price (for HECM purchase loan); total closing costs; the amount of lien against your home; and some other factors.
Title of your home always remains in your name, NOT in the name of the lender. Lender has no interest in your home except for the amount you owe the lender.
Your spouse, or if not available, your appointed guardian will continue with the management of the loan.
Yes, if it is revocable.
You practically have the same fees as in any other loan such as origination, appraisal, title, escrow, and the upfront mortgage insurance premium to HUD. All fees are regulated by HUD.
Yes, the value of your home is one of the most critical parameters in determining how much borrowing power you have.
Yes. However, most of these fees can be financed into the loan if there is sufficient equity.
Interest may accrue at a fixed or adjustable rate, as negotiated between the borrower and the lender. For adjustable rate mortgages, the mortgage interest rate is set at the U.S. Treasury Securities rate adjusted to a constant maturity of one year, plus a margin which is the same as the margin used to determine the expected average mortgage interest rate.
You do. If the loan is subjected to a fully funded set-aside out of your HECM proceeds available to you, then lender will use such HECM proceeds to pay property taxes and insurance premiums on your behalf. If the loan is subjected to partially funded set-aside, then you will receive semi-annual payments from HECM proceeds to be used to pay property taxes and insurance premiums.
Note that in either case, you remain responsible for payment of all other property charges such as HOA dues, water/sewage, etc.
No, it is tax-free. For further information, please contact your tax attorney.
No, it does not affect Social Security and Medicare. For more information, please contact these agencies for your specific circumstances.
There are five options you may choose:
Definitely! You will need to notify us as required by HUD/FNMA**. Lender will pay the insurance premium directly out of the funds in the credit line.
**Fannie Mae® is a registered trademark of Fannie Mae.
If you have money available in your credit line, you can request it any time for medical or personal need. You can also cut back or increase the monthly payment amount. There will be a minimal handling charge as regulated by HUD.
No. However, you are responsible for paying the real estate tax, hazard insurance and flood insurance if applicable. You also need to maintain the condition of your home.
No. You may make a full or partial repayment at anytime without any penalty.
No matter how large the loan balance becomes, you have the right to continue to live in the house. You will NEVER owe the lender more than the value of your home. HUD will pay the shortage for you, if there is any.
No. After you pass away, your heirs may pay the loan balance in full by cash or by refinancing the debt and they can keep your home.
The HECM loan becomes due and payable as soon as your home is no longer your principal residence.
Yes. Two of the other situations in which the HECM loan may become due and payable are:
Your heirs should pay the debt in full or liquidate your home within 30 days after the Repayment Notice is issued. Otherwise, the servicer will initiate foreclosure proceedings within six (6) months of the Repayment Notice.
The lender is paid at the time when the loan becomes due and payable, for example, when you sell your home. The lender will receive a payment from your heirs or sale proceeds of your home.
The total loan balance will include all the payments to you, the accrued interest, accrued mortgage insurance premiums, servicing fee, and other costs such as closing costs or repair fee financed as part of the loan balance. Note that the repayment amount will never exceed the appraised value of your home when your loan becomes due.
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