subject: Hecm Reverse Mortgage, Why Is It The Most Popular One [print this page] As you may already know, HECM reverse mortgage is insured by the Federal Government and sold through an FHA approved lenders only. The target of HECM reverse loans is to offer the seniors opportunities to use a part of their home equities by transferring it into cash money. They can withdraw the equity either as the monthly payments, credit line, lump sum or as a combination formed from these.
1. A Senior Can Buy A New Home.
This is possible if a senior can pay the downpayment from his own pocket. For instance, if a senior has sold his old home and wants to use only a part of that selling price to pay the downpayment and to buy the new home with the HECM reverse loan.
Then he will get a lot of disposable new cash. He can keep the remaining part of the selling price in the bank account. The monthly mortgage payments will be dropped away and the reverse loan has no back payments during the running time. And he gets a brand new home.
2. The Obligatory Mortgage Insurance Covers The Missing Part.
When the running time is over and its the time for the backpayment, it can happen in some rare cases, that the home selling price does not cover the whole sum of the money owed. Then the missing part will be paid from the mortgage insurance and the other assets of the senior will never be used to pay back the loan.
3. The Value Of The Home Is Never A Limit.
If a senior has very valuable home, it will never limit his qualification. One factor, which determines the loan amount is the appraised value of the home. If the home is very valuable, the HECM mortgage lender uses the legal maximum amount, which is $ 625.500. So the loan capital can never exceed this amount.
4. A Free Counseling.
Unfortunately there are a lot of scam artists also in this market, who try to rob the seniors by selling too big loans or by promising features, which their producst will not meet. To prevent their job and to give to the seniors useful and legal information and guidance the Federal Government has built a network of the counselors. The counselor meeting is extremely useful especially when a senior has a question list with him.
5. Is HECM Reverse Loan Cheaper?
This is impossible to say, because the private loans are based on the offers a senior will get from the lender, but the prices of the HECM loans are fixed and the same for all borrowers. The only way to find out the possible differencies is to ask an offer and to compare. One thing which is important is, that the HECM loans are isnured by the Government and the Government cannot make a bankruptcy.
