Home equity conversion mortgage loans make it possible for you to turn a part of your home equity into cash. If you need instant funds and have no way to get it, and you own a home, then this can be an ideal solution for you.
Difference from reverse mortgages
HECM loans are a type of a reverse mortgage. While both work in much the same way—home-based loans—they have two distinct differences. A home equity conversion mortgage requires a credit check while normal reverse mortgages do not. Also, reverse mortgages typically come with lower costs but a bigger interest rate.
Home equity conversion loans are the only type of reverse mortgage insured by the Federal Housing Administration, according to the Investopedia. So, keep that in mind before you pick one over the other.
Designed for seniors
HECM loans are specially designed to meet the needs of seniors. That’s why you need to be at least 62 years old before you can qualify for this loan. If you and your spouse are applying for a joint mortgage, make sure you both meet the requirements. The age of the youngest borrower can be a deciding factor, so you’ll need to keep that in consideration.
Factors that affect your loan
The amount of the proceeds you’ll get from the mortgage loan is determined by your age—or the age of the youngest borrower—along with the interest rate and the appraised value of your home along the FHA mortgage limit.
Risks
You stand to forfeit the loan if you fail to fulfill any of the terms and conditions at any time. Therefore, make sure you aren’t moving out of the property. Also, be careful about staying out of your home for too long. Any vacation longer than six months could violate the terms. Know more by consulting with a professional. For more information about HECM Loans, do not hesitate to contact Longbridge Financial, LLC, or click here for more details.
