HUDs Reverse Mortgage Home Loan

 

Looking for a way to use the equity in your paid off home during retirement? For many people a HUD reverse mortgage loan is the answer. A Home Equity Conversion Mortgage (HECM) is a federally insured mortgage backed by the Federal Housing Administration (FHA), which is a part of the Department of Housing and Urban Development (HUD).

You cannot get a reverse mortgage without the assistance of a mortgage counselor, approved by HUD. HUD ’s counselor will discuss all possible questions you might have, and help you decide on the best decisions to meet your specific circumstance. You can find a list of possible counselors at the Federal Trade Commission's website (www.ftc.gov/bcp/conline/pubs/homes/rms.htm) should you qualify, to assist you with a reverse mortgage home loan.

Reverse mortgages are much like regular mortgages, except instead of you paying back your loan, the lender pays you for your home’s equity. The value of your home is assessed and if you qualify, the lender provides you with a sum of money for it.

How a Reverse Mortgage Works:


* Your age (must be at least 62 to qualify), amount of equity in your home, and prevailing interest rates all determine the amount of money you can borrow on your reverse mortgage. The older you are the more equity you can borrow.
* You can elect to be paid in lump sum, monthly check, partial sum and monthly check, or line of credit.
* You can repay the loan when the home is sold or you no longer reside there. If you do not adequately care for the home, then the lender can force you out early. When the home sells, any remaining balance goes to you and your heirs. If you decide to keep the home. you will have to repay the reverse mortgage note.
* A Reverse Mortgage is a non recourse loan, meaning If the amount you owe on the loan is more than the home is worth, then your lender must make up the difference.
* You are free to use the money for anything you wish, including paying off the first mortgage on the property if you choose to do so.
* You do not need to pay taxes on proceeds from a reverse mortgage , because the funds received are considered a loan, not income. Likewise, funds from a reverse mortgage do not affect your Social Security benefits.

Reverse mortgages can provide cash to solve many problems, making them attractive for many individuals reaching retirement. There are, however, many choices making them somewhat confusing. That is why it is a good idea to consider HUD ‘s federally insured reverse mortgage backed by the FHA ,s Home Equity Conversion Mortgage. This assigns you a HUD approved counselor who can give you sound advice on making the best decision for a reverse mortgage home loan that best suits your particular financial circumstances.