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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 You Need To Know About Fha Reverse Mortgage Loans

Are you considering FHA reverse mortgage loans for your home? While there are many advantages to these types of reverse mortgage loans, there are also some things you should know before you moving forward with these types of loans.

The acronym FHA stands for the Federal Housing Administration; this is a branch within the United States Department of Housing and Urban Development or HUD. In order to qualify for these reverse mortgage loans there are certain requirements the FHA has set. One of those is that the homeowner must be at least sixty-two years of age, or older. The FHA will also provide the insurance which will make these reverse mortgage loans less expensive for the borrowers then similar reverse mortgage loans offered by private lenders and smaller institutions.

The only other requirement the FHA ask of you, other than being sixty-two years of age or older, is that you need to have equity in your home and little debt or mortgage against it. There are no other restrictions, required credit ratings, level of income or any other assets needed for getting FHA reverse mortgage loans. If you are approved for FHA reverse mortgage loans you can receive your loans in one of three options. You can take them it all in one lump payment, in monthly installments for a fixed term, or indefinite term as a line of credit against the loan.

FHA reverse mortgage loans are paid off either when the homeowners pass away, move out of the home, or sell the property. Then, the HUD collects the proceeds from the sales and if those proceeds exceed the loan, then the difference is either awarded to the homeowner, if he or she is alive, or to the homeowner's heirs. If the proceeds do not cover the amount of the loan, then the HUD will cover the difference.

The main benefit of these reverse mortgage loans are that the homeowner is not required to make monthly payments against the loan. That is why they're called reverse mortgage loans because instead of you having to make payments each month, the lending institution is making payments to you.

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