Frequently Asked Questions about HUD's Reverse Mortgages

Frequently Asked Questions about HUD's Reverse Mortgages

For more details visit:

http://www.beingarealtor.com



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.



Can I qualify?

62 years of age or older

Own your home outright

Financial resources to pay ongoing property charges including taxes and insurance

Consumer information free



Can I apply for a HECM?

If you did not buy your 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.



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.



Difference:

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



Home Equity Loan:

With a second mortgage, or a home equity line of credit, borrowers must make monthly payments on the principal and interest.



Reverse Mortgage:

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.



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 or the HECM FHA mortgage limit of $625,500 or the sales price



How to find a Reverse Mortgage lender?

FHA does NOT recommend using any service that charges a fee

Online at www.hud.gov

Call (800) 569-4287 toll-free



How do I receive my payments?

For adjustable interest rate mortgages, you can select one of the following payment plans:



Tenure:

Equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.



Team:

Equal monthly payments for a fixed period of months selected.



Line of Credit:

Unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.



Modified Tenure:

Combination of line of credit and scheduled monthly payments for as long as you remain in the home.



Modified Term:

Combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.



Single Disbursement Lump Sum:

A single lump sum disbursement at mortgage closing.



What if I change my mind and no longer want the loan after I go to closing?How do I do this?

By law, you have three calendar days to change your mind and cancel the loan.  This is called a three day right of rescission.  The process of canceling the loan should be explained at loan closing.  Be sure to ask the lender for instructions on this process.



For more information visit:

                   http:www.beingarealtor.com






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