FHA Reverse Mortgages
We at FHA Today would
like to tell you more about the division of our company that
works exclusively with bringing our customers specialized
FHA Reverse Mortgage Financing. 
Reverse Mortgages are becoming popular in America. The U.S.
Department of Housing and Urban Development (HUD) created
one of the first. HUD's Reverse Mortgage is a federally-insured
private loan, and it's a safe plan that can give older Americans
greater financial security. Many seniors use it to supplement
social security, meet unexpected medical expenses, make home
improvements, and more. You can receive free information about
reverse mortgages by calling AARP at: 1-800-209-8085, toll-free.
Since your home is probably your largest single investment,
it's smart to know more about reverse mortgages, and decide
if one is right for you!
Top Ten Things To Know About Reverse Mortgages
1. What is a reverse mortgage? A reverse mortgage is a special
type of home loan that lets a homeowner convert a portion
of the equity in his or her home into cash. The equity built
up over years of home mortgage payments can be paid to you.
But unlike a traditional home equity loan or second mortgage,
no repayment is required until the borrower(s) no longer use
the home as their principal residence. HUD's reverse mortgage
provides these benefits, and it is federally-insured as well.
2. Can I qualify for a HUD reverse mortgage? To be eligible
for a HUD reverse mortgage, HUD's Federal Housing Administration
(FHA) requires that the borrower is a homeowner, 62 years
of age or older; own your home outright, or have a low mortgage
balance that can be paid off at the closing with proceeds
from the reverse loan; and must live in the home. You are
further required to receive consumer information from HUD-approved
counseling sources prior to obtaining the loan. You can contact
the Housing Counseling Clearinghouse on 1-800-569-4287 to
obtain the name and telephone number of a HUD-approved counseling
agency and a list of FHA approved lenders within your area.
3. Can I apply if I didn't buy my present house with FHA
mortgage insurance? Yes. It doesn't matter if you didn't buy
it with an FHA-insured mortgage. Your new HUD reverse mortgage
will be a new FHA-insured mortgage loan.
4. What types of homes are eligible? Your home must be a
single family dwelling or a two-to-four unit property that
you own and occupy. Townhouses, detached homes, units in condominiums
and some manufactured homes are eligible. Condominiums must
be FHA-approved. It is possible for individual condominiums
units to qualify under the Spot Loan program.
5. What's the difference between a reverse mortgage and a
bank home equity loan? With a traditional second mortgage,
or a home equity line of credit, you must have sufficient
income versus debt ratio to qualify for the loan, and you
are required to make monthly mortgage payments. The reverse
mortgage is different in that it pays you, and is available
regardless of your current income. The amount you can borrow
depends on your age, the current interest rate, and the appraised
value of your home or FHA's mortgage limits for your area,
whichever is less. Generally, the more valuable your home
is, the older you are, 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. Like
all homeowners, you still are required to pay your real estate
taxes and other conventional payments like utilities, but
with an FHA-insured HUD Reverse Mortgage, you cannot be foreclosed
or forced to vacate your house because you "missed your mortgage
payment."
6. Can the lender take my home away if I outlive the loan?
No! You do not need to repay the loan as long as you or one
of the borrowers continues to live in the house and keeps
the taxes and insurance current. You can never owe more than
your home's value.
7. Will I still have an estate that I can leave to my heirs?
When you sell your home or no longer use it for your primary
residence, you or your estate will repay the cash you received
from the reverse mortgage, plus interest and other fees, to
the lender. The remaining equity in your home, if any, belongs
to you or to your heirs. None of your other assets will be
affected by HUD's reverse mortgage loan. This debt will never
be passed along to the estate or heirs.
8. How much money can I get from my home? The amount you
can borrow depends on your age, the current interest rate,
and the appraised value of your home or FHA's mortgage limits
for your area, whichever is less. Generally, the more valuable
your home is, the older you are, the lower the interest, the
more you can borrow.
9. Should I use an estate planning service to find a reverse
mortgage? I've been contacted by a firm that will give me
the name of a lender for a "small percentage" of the loan?
HUD does NOT recommend using an estate planning service, or
any service that charges a fee just for referring a borrower
to a lender! HUD provides this information without cost, and
HUD-approved housing counseling agencies are available for
free, or at minimal cost, to provide information, counseling,
and free referral to a list of HUD-approved lenders. Call
1-800-569-4287, toll-free, for the name and location of a
HUD-approved housing counseling agency near you.
10. How do I receive my payments? You have five options:
Tenure - equal monthly payments as long as at least one borrower
lives and continues to occupy the property as a principal
residence. Term - equal monthly payments for a fixed period
of months selected. Line of Credit - unscheduled payments
or in installments, at times and in amounts of borrower's
choosing until the line of credit is exhausted. Modified Tenure
- combination of line of credit with monthly payments for
as long as the borrower remains in the home. Modified Term
- combination of line of credit with monthly payments for
a fixed period of months selected by the borrower.
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