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Reverse Mortgage 

Frequently Asked Questions about HUD's Reverse Mortgages! 

The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program, which enables you to withdraw some of the equity in your home.  The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement Social Security, meet unexpected medical expenses, make home improvements and more.  However, borrowers are required to continue paying property taxes and insurance and maintain the home according to FHA guidelines. Typically the loan does not become due as long as you live in the home as your primary residence and continue to meet all the loan obligations.

 
Reverse Mortgage is the #1 option for thousands of Senior Citizens in California. Getting a line of credit to enjoy your retirement never been easier.
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1. What is a reverse mortgage?

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.  However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.  You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.



2. Can I qualify for FHA's HECM reverse mortgage?

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, have the financial resources to pay ongoing property charges including taxes and insurance, and you must live in the home. You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan. You can find a HECM counselor online or by phoning (800) 569-4287.


3. Can I apply for a HECM even if I did not buy my present house with FHA mortgage insurance?

Yes.  You may apply for a HECM regardless of whether or not you purchased your home with an FHA-insured mortgage. 


4. What types of homes are eligible?

To be eligible for the FHA HECM, your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.


5. What are the differences between a reverse mortgage and a home equity loan?

With a second mortgage, or a home equity line of credit, borrowers must make monthly payments on the principal and interest.  A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments.  With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.


6. Will we have an estate that we can leave to heirs?

When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid.  All proceeds beyond the amount owed belong to your spouse or estate.  This means any remaining equity can be transferred to heirs.  No debt is passed along to the estate or heirs.


7. How much money can I get from my home?
The amount varies by borrower and depends on:
Age of the youngest borrower or eligible non-borrowing spouse Current interest rate; and
Lesser of appraised value








Example of How a Reverse Mortgage Works? 

John and Anne are a retired couple, aged 72 and 68, who want to stay in their home, but need to boost their monthly income to pay living expenses. They would like to take a belated honeymoon. They have heard about reverse mortgage loans, but didn’t know the details. They decide to contact a reverse mortgage advisor to discuss their current needs and future goals.

John and Anne meet with an FHA appraiser, who determines that their home’s value is $300,000. They currently owe $35,000 on their mortgage.  Below is an illustration of how John and Anne spend their loan proceeds.*

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Are you looking for reverse mortgage options? Visit or call Futura National Home Inc. today. Whether you are looking to refinance or to Sell, let our experts help you! 
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