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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...

 

What Everyone Should Know About Hecm

Senior citizens can use their home's equity to take a home equity conversion mortgage loan (HECM). The HECM is a type of reverse mortgage that allows seniors to transform the equity in their houses into cash. Even if they do this, they can live in their home. But, with the money received they can cover expenses like medical bills, home improvements, and home repairs.

The HECM was introduced by the Federal Housing Administration. Even if there are banks, credit unions, mortgage companies, and saving and loan companies that offer this type of loan, these institutions must receive the approval of the FHA to operate on this field.

There are however, some conditions that the borrower must fulfill in order to be eligible for the HECM. He must be at least 62 years old. Also, the borrower must own the house, or he must be on the point of paying it off, and the house must be its principal residence. Another condition would be attending reverse mortgage counseling sessions. However, the Department of Housing and Urban Development provide free reverse mortgage counseling in order to inform the homeowners about the consequences and the benefits of getting a HECM.

Also, the amount that the homeowner can receive through the HECM loan depends on the age of the borrower, the value of the house and the interest rates.

The loan amount can be received as monthly payments, through a credit line, in the form of a single payment, or combinations between these. The house of the borrower will act as a security for the HECM loan. The house will still be the borrower's property but he will have to obligation to further pay the repairs, maintenance, property tax, and insurance.

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