HECM Reverse Mortgages in
A reverse mortgage allows you to convert the equity in your home to cash. The only type of reverse mortgage insured by the U.S. government is called a Home Equity Conversion Mortgage—often referred to by the acronym HECM. A HECM reverse mortgage is only available through an FHA approved lender or an approved Mortgage Broker/Banker. The advantage of a Broker is that they are licensed with all the lenders and can pick the best lender for you.
Is a HECM Reverse Mortgage the Right Type of Loan for You?
A reverse mortgage Broker who specializes in home loans for senior citizens will be an essential asset in helping you determine if a HECM reverse mortgage is right for you. There are a few different types of reverse mortgages, HECM being one of them. A certified Broker will help you determine if a HECM is your best option.
A HECM reverse mortgage is a non-recourse mortgage. Essentially that means that when repayment is due, the balance will never be higher than the value of the property, which applies even if the property’s value has decreased.
A common way to repay a HECM is for the heirs to sell the house and divide any remaining equity among themselves, but that is not the only option. You can repay a HECM at any time before the loan falls due. And heirs also have the option to purchase the property at 95% of fair market value.
A variant of the reverse mortgage is a HECM for purchase, which people often use to downsize, using the mortgage to partially fund the purchase of the new home without tying up all the assets from the sale of the old home.
What is the Difference Between a Jumbo and HECM Reverse Mortgage?
Jumbo reverse mortgages are also known as proprietary reverse mortgages. These loans are offered by Lenders or Brokers that give high-value homeowners access to larger amounts than the FHA’s upper lending limit of $679,650. Because they are not FHA-insured, they are not subject to the FHA lending limit, and some FHA regulations.
If you own a high-value home, you may be able to get more money through a jumbo reverse mortgage than through a HECM reverse mortgage. Jumbos are generally more advantageous for older borrowers (typically in their 70s) with condos worth more than $500,000 and homes worth more than about $1.2 million.
What Can You Expect from a HECM Reverse Mortgage in Placer County?
If you are interested in a HECM reverse mortgage, you must meet with a HUD-approved HECM counselor. The HECM counselor can help you decide the pros and cons of a reverse mortgage for your situation, and give you a better idea of the process of attaining a HECM loan.
By beginning the application process for a HECM reverse mortgage, you will be put in contact with a specialist who can help you start the process and get you set up with a HECM counselor.
Costs and Benefits of a HECM Reverse Mortgage in Placer County
The following are costs you may incur while attaining a HECM reverse mortgage loan:
- Third-party services fee
- Upfront Mortgage Insurance Premium (MIP)
- Monthly Mortgage Insurance Premium (MIP)
- Servicing Fee
- Loan Origination Fee
- Closing Costs
If you want to plug these costs into a reverse mortgage calculator, you can get more details about the costs on our Costs and Fees of a Reverse Mortgage page.
The benefit of a HECM reverse mortgage is that it gives you access to money that can help subsidize your retirement. By trading equity for extra income, you can retire peacefully, and focus on what really matters. Apply today.