Question You Might Be Asking About Reverse Mortgages
Why Is It Called A Reverse Mortgage?
This loan is aptly named the Reverse Mortgage because unlike traditional loans, where you make monthly principle and interest mortgage payments to the bank, the bank makes a lump sum or monthly payments to you, the homeowner(s), with multiple choices of payout options.
What Is A HECM Reverse Mortgage?
“HECM” short for “Home Equity Conversion Mortgage” is also known as a “Reverse Mortgage”. It is a SENIOR ONLY loan that allows, qualified US homeowner(s) 62 and older, access to the equity they have built up in their home. This loan is regulated by HUD and insured by the FHA. This program was developed by HUD, during the Reagan administration, to provide qualified U.S. homeowners the ability to maintain their dignity and meet their financial needs while aging in place gracefully.
What Are The Main Obligations Of The Loan?
The loan must be repaid if any of the following obligations of the loan are not met.
- The borrower(s) must continue to stay current on their property taxes and homeowner’s insurance while maintaining the condition of the property to meet the FHA loan guidelines.
- At least one borrower must continue to live in the home as their primary residence. For any reason a borrower on the loan no longer occupies the property the loan will be due.
- The home must continue to be owned by the borrower(s). If the property is sold the loan must be repaid.
Are All Types Of Homes Eligible?
No, not all homes are available for Reverse Mortgages. The homes that are eligible include single-family homes, detached homes, townhouses, and two-to-four unit properties that are owner-occupied. FHA-approved Condominiums. Some manufactured homes are eligible but must meet FHA guidelines.
We want you to have all the facts to make the most informed decision possible. If you have a question that is not answered below please send us your question or give us a call at 1 (650) 292-5744. We are always happy to educate interested senior homeowners.