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MBA Urges Regulators To Avoid Invoking Suitability Standards
The Mortgage Bankers Association (MBA) recently made a preemptive strike against what it obviously perceives as the next threat against the mortgage industry - "suitability standards." Read more...

 

Facts On Hecm Loans

A home equity conversion mortgage or HECM loan has been introduced by the Federal Housing Administration or FHA for the purpose of providing housing solutions to senior citizens. A HECM loan is a federally insured reverse mortgage loan program in which borrowers can use their home equity towards obtaining a mortgage loan. Here are a couple of the benefits related to a HECM loan.

A HECM loan program is unique in several aspects. Firstly, the borrower is not required to make any repayments on a HECM loan as long as the home is his or her primary residence. Under the HECM program, the FHA does not indicate any sorts of income ceiling. The eligibility criteria for the HECM loan program are also quite convenient. The applicant must be sixty-two years old and should be the prime owner of the property. Apart from that, he or she should be residing in the home and must have a very low mortgage balance. Also, the borrower is expected to have complete understanding about how the HECM loan program works. For this purpose, attending a consultation and counseling session from a HECM counselor is mandatory for any applicant before applying for the HECM loan.

Another unique feature of the HECM loan program for seniors is its very convenient repayment terms. The borrower will have the flexibility of opting for different modes of loan payment. Also, a HECM borrower can either receive the amount in the form of monthly equated installments or even choose to receive the money in a line of credit.

However, there are certain factors based on which the eligible loan amount of a HECM will be calculated. These factors will include the age of the applicant, the equity built up over the home, FHA limits in the region of residence and the existing interest rates.

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