The concept of Home Equity Conversion Mortgages centers on seniors being able to borrow against the equity in their home without having to repay the borrowed amount while the loan remains in good standing. By using the equity as additional income, seniors can make repairs, pay taxes and insurance, payoff other debt, pay for health care, take a vacation, pay for day to day expenses or use the money for any other purpose they choose.
As long as the senior occupies the home, she doesn’t have to repay the reverse mortgage. As far as retirement planning goes, the HECM offers one of the best ways to leverage home ownership and equity. The staff uses standard resolution vehicles such as modifications, repayment plans, forbearance plans or in some cases a combination of each resolution strategy is used. When retention is not a viable option, the team works with the borrower to develop a disposition strategy that will help them maintain their dignity by avoiding foreclosure. Once the loan becomes due, you normally have twelve months to repay it.
A proactive attitude is always best, and most appreciated by creditors. Don’t wait until it’s too late. A creditor who violates the disclosure requirements may be sued for twice the amount of the total finance charge on the loan. In the case of a home mortgage, this can be a very significant amount, amounting in to the scores of thousands of dollars. Most lenders can work with home owners even if they have poor credit and have a foreclosure date. Chances to obtain a loan to regain a current status on your mortgage become diminished once you have received a notice of default (NOD).
The loan, commonly known as HECM, is funded by a lending institution such as a mortgage lender, bank, credit union or savings and loan association. To assist the homeowner in making an informed decision of whether this program meets their needs, they are required to receive consumer education and counseling by a HUD-approved HECM counselor . If you don’t, and if you could easily make the monthly repayments on a home equity loan or home equity line-of-credit, these alternatives are much less costly than a reverse mortgage. Many state and local governments offer very low-cost loans for paying your property taxes or making home repairs.
There is no risk of losing the house in a foreclosure like there is with a regular mortgage, and the money received can be used according to the recipient’s own discretion. The way a HECM loan is paid back is through the proceeds generated by the sale of the home. Florida foreclosure activity increased 133 percent from 2007 and nearly 412 percent from 2006. Arizona’s 2008 total of 116,911 properties receiving a foreclosure filing was third highest among the states. In matters of foreclosure and reverse mortgages the CHRIC is the most experienced counseling body in the county.
Additionally, at today’s interest rates, the senior homeowner, or their heirs, would also save approximately $28,000 in interest costs over the expected life of the loan under the terms of the HECM 100 reverse mortgage program. This can be an issue if the loan is paid back early. This site “provides step-by-step information on how to become financially literate” with respect to home loans. Includes material about credit scores, how to qualify for a mortgage, types of mortgages (fixed-rate, balloon, adjustable-rate, convertible, and more), and foreclosure and delinquency, Also includes a mortgage calculator to help estimate payments, and information for special buyers situations, such as living together, divorced, or second home purchases.
