What Is A Reverse Loan (HECM)?

What exactly is a reverse mortgage?

Answer:

A reverse mortgage is a kind of loan which allows older home owners in Salem Oregon to borrow from the equity in their homes.

It’s labeled a “reverse” mortgage because instead of making payments to the lender, you get money from the lender. The funds you receive along with the interest charged on the loan add to the balance of your loan every month. Over time, the mortgage balance grows. Because home equity is the value of your home less any loans, you have less equity in your home as your loan balance increases, that may become a problem if you ever need or want to move.

The majority of reverse mortgages generally known as Home Equity Conversion Mortgages (HECMs). The Federal Housing Administration (FHA), a divisions of the Department of Housing and Urban Development (HUD), insures HECMs.

To qualify for a HECM:

You need to be at least 62 years old.
Your home will have to be your principal residence.
You must own your house outright, or have a low mortgage balance which can be paid off at closing with cash from the reverse home mortgage. You’ll find limits to how much money you are able to borrow. So, in the event you still owe a lot of money on your standard mortgage, you may not be qualified for a reverse mortgage.
You will need to have the income to cover ongoing real eOregon charges which includes taxes and insurance coverage, in addition to repair and maintenance expenses.
You also have to speak with a HUD-approved counselor to discuss your qualification, the financial implications of the home loan, and other loan alternatives.

If you or your parents are looking at a reverse mortgage, get all the details first. We’ve got several sources to help you find out more on reverse mortgages.