HUD-approved
housing specialists provide homeowners with expert and personalized
help with their mortgage issues for free. For more information, call a
Nonprofit at (800) 254-4100 or contact the U.S. Department of Housing and Urban Development at Telephone: (202) 708-1112
As Home Equity Conversion Mortgages (HECM) have gained in popularity, senior citizens are confronted with difficult choices regarding the equity option.
The option may prove to be a viable supplement to your retirement accounts, Social Security or pensions; however, the idea of sacrificing the hard earned equity in one's home in the current economic climate can be disconcerting. Therefore, it is the goal of Consumer Credit Counseling to provide you with compassionate efforts to making the best decision possible for your financial circumstance.
Consumer Credit Counseling housing counselors will work with you to understand the many different available options including alternative options, effect on heirs, application, processing, closing and after closing issues related to reverse mortgages. The housing counselors will discuss eligibility requirements, as well as features unique to Home Equity Conversion Mortgages.
The counseling session will also help you understand the costs associated with reverse mortgages and specific borrower obligations. You will also be provided with information on housing alternatives and supplements should a Home Equity Conversion Mortgage not meet your specific needs.
Reverse Mortgages: Get the Facts Before Cashing in on Your Home’s Equity
If you’re 62 or older – and looking for money to finance a home improvement, pay off your current mortgage, supplement your retirement income, or pay for healthcare expenses – you may be considering a reverse mortgage. It’s a product that allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills.
The Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to understand how reverse mortgages work, the types of reverse mortgages available, and how to get the best deal.
In a “regular” mortgage, you make monthly payments to the lender. In a “reverse” mortgage, you receive money from the lender, and generally don’t have to pay it back for as long as you live in your home. The loan is repaid when you die, sell your home, or when your home is no longer your primary residence. The proceeds of a reverse mortgage generally are tax-free, and many reverse mortgages have no income restrictions. Types of Reverse Mortgages
There are three types of reverse mortgages:
single-purpose reverse mortgages, offered by some state and local government agencies and nonprofit organizations
federally-insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs) and backed by the U. S. Department of Housing and Urban Development (HUD)
proprietary reverse mortgages, private loans that are backed by the companies that develop them
Single-purpose reverse mortgages are the least expensive option. They are not available everywhere and can be used for only one purpose, which is specified by the government or nonprofit lender. For example, the lender might say the loan may be used only to pay for home repairs, improvements, or property taxes. Most homeowners with low or moderate income can qualify for these loans.
HECMs and proprietary reverse mortgages may be more expensive than traditional home loans, and the upfront costs can be high. That’s important to consider, especially if you plan to stay in your home for just a short time or borrow a small amount. HECM loans are widely available, have no income or medical requirements, and can be used for any purpose.
Before applying for a HECM, you must meet with a counselor from an independent government-approved housing counseling agency. Some lenders offering proprietary reverse mortgages also require counseling.
The counselor is required to explain the loan’s costs and financial implications, and possible alternatives to a HECM, like government and nonprofit programs or a single-purpose or proprietary reverse mortgage.
The counselor also should be able to help you compare the costs of different types of reverse mortgages and tell you how different payment options, fees, and other costs affect the total cost of the loan over time.
How much you can borrow with a HECM or proprietary reverse mortgage depends on several factors, including your age, the type of reverse mortgage you select, the appraised value of your home, and current interest rates. In general, the older you are, the more equity you have in your home, and the less you owe on it, the more money you can get.
The HECM lets you choose among several payment options. You can select:
a “term” option – fixed monthly cash advances for a specific time.
a “tenure” option – fixed monthly cash advances for as long as you live in your home.
a line of credit that lets you draw down the loan proceeds at any time in amounts you choose until you have used up the line of credit.
a combination of monthly payments and a line of credit.
You can change your payment option any time for about $20.
HECMs generally provide bigger loan advances at a lower total cost compared with proprietary loans. But if you own a higher-valued home, you may get a bigger loan advance from a proprietary reverse mortgage.
So if your home has a higher appraised value and you have a small mortgage, you may qualify for more funds.
FAIR USE NOTICE consumercounseling.org This site contains copyrighted material, the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, scientific, and social justice issues etc. US LAW We believe that our use of any such copyrighted material constitutes a 'fair use' as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: preview Law Cornell Edu.
FTC Notice Beginning December 1, 2009, the U.S. Federal Trade Commission (FTC) began enforcing new rules regarding transparency in advertising relations between product endorsers, advertisers, affiliate marketers, product reviewers, bloggers, celebrities, and other marketers, and the general public. Opinions on this blog/website are our own or others we have designated as contributing authors. No one else is responsible for the content. We have not received any compensation for writing posts, articles, reviews, or other content, and we have no material connection to the brands or products mentioned, except as noted below. We do not accept free products from manufacturers or advertisers or free books from writers and publishers in exchange for a review or an article. All of the product reviews on this blog are influenced solely by the performance of the product itself. We do not receive any kind of monetary compensation for content or reviews including cash or free products.
Affiliate Notice We maintain an affiliate/publisher/republisher relationship with hundreds of companies. This page may contain “affiliate links” to one or more of these companies. An affiliate link is a special URL to the affiliate merchant which lets him/her know you reached his/her site/sales page through my recommendation, text link, or banner ad. If you follow an affiliate link from this website and purchase a product or service, or complete a lead form, we hope to be paid a commission from the affiliate or CPA merchant. Affiliate links may be textual or banner or both. This site may contain in-context textual ads or banner ads, such as from Google, or others over which we have no control over the content. We may or may not have an affiliate/business relationship with the companies advertising on those services. If you click on one of these links, we hope to be paid a small sum for sending you to that merchant’s site. Otherwise, we would have no reason to give Google and others space on this website.You should consult the respective privacy policies of these third-party ad servers for more detailed information on their practices as well as for instructions about how to opt-out of certain practices. We cannot control the activities of other advertisers or web sites. Unless otherwise stated, the website guest or visitor should assume that any link to a third-party vendor is a paid link, and that the author or website owner may receive compensation for that link.
Legal Information Is Not Legal Advice This site provides information about the law designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
Consumer Credit Counseling Information, Debt Management Plan Information, Debt Settlement Plan information, Credit Counseling, Credit Score, Consumer Credit Counseling Service, CCCS, Bill Consolidation, Credit Repair, and Debt Consolidation is not advice, and we recommend you consult a licensed credit counseling agency, debt settlement attorney, and/or licensed debt management plan administrator in your state if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
