It is our pleasure to specialize in placement of Home Equity Conversion Mortgages (HECM) for the benefit of our clients. These are best known as Reverse Mortgages. The type of Reverse Mortgage we offer, and the only kind available in Colorado, is the one insured by the Federal Housing Administration (FHA) of the US Department of Housing and Urban Development (HUD).
Following are specific facts regarding the benefits of Reverse Mortgage.
- Reverse mortgages are extremely well protected - One of the protections is the requirement that borrowers receive counseling from a HUD trained and approved third-party counselor. There is also a prohibition on cross-selling.
- No monthly payments required - Instead of making monthly mortgage payments, the reverse mortgage is due and becomes payable once the home is no longer the primary residence of the borrower(s). With no monthly mortgage payments required, the risk of foreclosure is reduced.
- There are a variety of program options available - The HECM Standard, HECM Saver and Home Purchase Programs are available with either fixed rate or adjustable rate options.
- The interest rate is not determined by your income or credit score - The interest rate is based on the program chosen, no matter what the borrower’s income or credit score is. With a conventional mortgage, one’s credit score, income and assets will impact the interest rate.
- Funds are guaranteed to be available during the term of the loan - As long as the borrower abides by the terms of the loan, the funds are guaranteed to be available. Borrowers are responsible to pay property taxes, insurance and maintain the home, and if applicable, pay home owner association fees.
- Flexibility on how funds are received - Funds are available to borrowers in an interest bearing line of credit, monthly payments, in a lump sum or a combination of these methods.
- No limitations on how the funds can be used - One can use the funds received from the reverse mortgage however one chooses - there are no restrictions. The reverse mortgage is like any other mortgage where the borrower is using the equity of their home to meet their needs and desires now.
- The title stays in your name - The bank does not own your home.
- Closing costs are comparable to conventional loans - As with any mortgage there are closing costs. While often said to be expensive, the reverse mortgage closing costs are actually comparable to those of a conventional loan.
- Fees charged are regulated by HUD – The US Department of Housing and Urban Development only allows necessary fees which are standard and customary - no mark up and “junk” fees are allowed.
- Reverse mortgages are non-recourse – On settlement of the mortgage, if the loan balance is higher than what the home can be sold for, the borrower or their estate does not owe the difference. If the home is sold for more than the loan balance, the difference benefits the borrower or their heirs.
- Social Security and Medicare are not impacted - One can still receive Social Security and Medicare with a reverse mortgage. Medicaid may also be received under certain circumstances. The reverse mortgage is a loan and the proceeds are not considered income.
- Present value is protected in a declining value market - With property prices in certain parts of the country continuing to stagnate or fall, this FHA-insured reverse mortgage is one way to lock in a home's current value and protect its equity.
- You may make payments if you want to - but you do not have to make payments. Payments are not prohibited and are optional and not required. You may pay-off the reverse mortgage just as you may pay-off a forward mortgage.