FHA Reverse Mortgages

FHA reverse mortgages or HECM loans require the home to conform to FHA property standards and flood requirements.

Borrowers can either receive payments for the rest of their lives with what is known as a life tenure reverse mortgage, or for a specific term, generally five to 20 years. A term loan is usually appropriate only if you plan to sell your house when the loan comes due, perhaps to move into a retirement community. Borrowers must pay 2 percent for the FHA insurance in addition to a 2 percent origination fee. They also pay interest on the loan.

Reverse mortgage providers  recover their principal, plus interest, when the home is sold. The remaining value of the home goes to the homeowner or to his or her survivors. Lenders most likely want to do the close of escrow billing because they are eating the cost if the appraisal is completed before the couseling session regardless of whether or not the deal funds.

Generally, Jumbos begin to offer an advantage when the home is valued above $600,000, but there are exceptions for both higher and lower values. The older the homeowner is, the more likely that a jumbo could offer more money on a home value of less than $600,000. Generally, the more valuable your home is, the older you are and the lower the interest, the more you can borrow. You don't make payments, because the loan is not due as long as the house is your principal residence. 

It used to be that the lender could only control the origination fee, where the profit to the lender is made and the monthly service fee… now the lender can control the interest rate.

FHA Reverse Mortgages allows a homeowner to tap their home equity and not have to make monthly payments. The HECM has been limited to the value reflected in a home’s appraisal. HECM fixed rate reverse mortgage is available in many states. The Prime Advantage Fixed Rate Jumbo product eliminates closing costs and will give the borrower the comfort of knowing how much they will owe at any point in time. HECM housing counselors will discuss program eligibility, financial implications and alternatives to obtaining a HECM plus provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, you as a homeowner should be able to make an independent, informed decision of whether this product will meet your needs.

Seniors with high home values- those exceeding the $362,790 limit (or the FHA reverse mortgages limit for their county) should definitely explore all of their options. Senior homeowners age 62 and older can use FHA reverse mortgages to convert the equity in their homes into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the homes. Instead of making monthly mortgage payments, home owners will receive money from the equity in their home when needed TAX FREE! Senior homeowners can convert the equity in their homes into cash. A Reverse Mortgage Loan does not have to be repaid until the borrower no longer occupies the home.