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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...

 

Pros And Cons Of A Hecm Reverse Mortgage

A HECM reverse mortgage is the most popular program with more than ninety percent of seniors. But it isn't perfect, like with most other things in this life there are pros and cons with a heck reverse mortgage and potential borrowers should be aware of them before they make any final decision about taking one out on their home.

HECM reverse mortgage loans are only available to borrowers who are sixty-two years of age or older, who completely own outright their home, or have very little mortgage and who live in certain types of home.

Unlike regular mortgages where monthly payments are required to pay back the principal amount plus the interest, with a HECM reverse mortgage there are no such monthly repayments. With a regular mortgage you risk losing your home if you don't keep up with the repayment plan; however, with a HECM reverse mortgage there are no monthly repayments so you don't risk losing your home. In fact, with a HECM reverse mortgage, the title deed stays in the hands of the borrower and never the lender. Unlike a regular mortgage where equity is put back into the home with each repayment, with HECM reverse mortgage equity is taken out of the home with each payment made to the borrower.

The biggest plus of a HECM reverse mortgage is that the program is federally insured. The US government is the one who guarantees that the borrower will receive every penny they're entitled to, no matter what. If the lender goes bust or there is insufficient equity in the home to pay the borrower, the government will pick up the tab.

However there is a ceiling on the amount that can be borrowed. It all depends on where the property is located and currently varies from $200,160 to $362,790.

Seniors who receive SSI or Medicaid can find that these will be reduced if they don't spend their entire loan amount each month.

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