Reverse Mortgage Loans
A Reverse Mortgage Loan which is also called Home Equity Conversion Mortgage (HECM) is a unique loan type geared towards seniors and insured by the FHA. This special type of loan allows seniors to access and benefit from the equity they have built in their home. The borrower may take out a line of credit or a certain amount (or both) from the equity.
- the borrower has to be at least 62 years of age
- you have to own the home or have a small mortgage balance
- loan amount depends on age of the youngest borrower, value of home, rate and lending limit
While a reverse mortgage may sound like a great option for seniors, because the loan does not have to be repaid until the borrower’s passing, the house is being sold or the owner moves out of the home, there are some important things to consider before you jump on a reverse mortgage:
- can affect benefit eligibility
- higher closing costs and interest rate
- diminishes value of estate
- you are still responsible for paying property taxes, insurance and repairs on your home
- failure to pay taxes, insurance etc may force you to repay your loan early
Because of those drawbacks it is mandatory for applicants to attend a HUD approved home counseling program to make certain the borrower understands all implications of a reverse mortgage loan.
KDA Home Financial has extensive experience and knowledge with government backed loans. If you think a reverse mortgage might be right for you contact us today at 480-939-3009.