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FHA Reverse Mortgage

FHA Reverse Mortgage Program is meant for seniors who are a homeowner and have built equity in the home they are living. This program is known as Home Equity Conversion Mortgage or in short HECM. A reverse mortgage is an excellent way to use the equity in your home without any concern to pay back the borrowed amount. Unlike a home equity loan or a refinance program, there is no fear of foreclosure in a reverse mortgage option. HECM for purchase even allow you to buy a new property provided you have sufficient fund to meet the deficiency and closing costs.

The fund is available as a fixed monthly payment or as a line of credit either for a specified term or for the life of the borrower. The maximum amount you can borrow under the plan depends on the appraised value of your property, sales price, current interest rate and the FHA reverse mortgage loan limits, which are different for different locations. The loan amount and the applicable rates are usually required to be paid after the death of the borrower or at the sale of the home.

FHA Reverse Mortgage Lenders



Home Equity Conversion Mortgage is insured by the US Department of Housing and Urban Development (HUD), and is available only through an FHA approved lender. Not all lenders may offer this program in your state. You need to search the HUD database of FHA reverse mortgage lenders to find one near you. To do so, visit hud.gov and open the appropriate page.

The lender list page contains a form asking you to enter a search criterion. Select a state, such as California, Maryland or Texas and scroll down the page to see a list of lender type. Uncheck the Title I Property Improvement and Check HECM. Press the Search button. You will see a list of lenders who might be able to offer FHA reverse mortgage program to you. Similarly, you can perform a search for FHA reverse mortgage counselors and HECM counseling agencies.

FHA Reverse Mortgage Appraisal Guidelines



The property must be a single family home to qualify for the program. Moreover, the borrower must live in the property during the life of the loan. A condo must be an FHA approved project and a manufactured home must comply with the FHA guidelines for manufactured homes. The reverse mortgage appraisal must have the same standards and forms as are required in an FHA single-family appraisal. The appraisers should follow guidelines regarding making a notes of deficiencies and repair items. The complete reverse mortgage appraisal guidelines and other details can be found in HUD Handbook 4235.1.

FHA Reverse Mortgage Requirements



The minimum age for the borrowers to qualify for FHA reverse mortgage is 62 years. The age is an important factor in determining the maximum loan amount one can borrow. As the loan is due after the death of the borrower, the property must be sold to repay the principal plus applicable interest in full. If a portion of the proceeds is still left it goes to the legal heirs. The insurance cover provided by HUD ensures that the total debt does not exceed the amount you get after selling your home.

It is important to the check the practicality of obtaining a reverse mortgage. This analysis can be performed by using an FHA reverse mortgage calculator made available by a non-profit organization known as AARP. Details of program and an explanation of the terms associated with it can be found on the HUD website. You can also browse our website to find more information on HECM.

Website: www.hud.gov




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