The Reverse Mortgage Program is actually a special type of loan where a homeowner aged 62 years and older can convert the equity in his home to cash to ease his financial responsibilities. Here the equity built up over years of mortgage payments can be provided to the owner in lump sum or in installments. In contrast to home equity loan there is need of repayment until the borrower no longer the uses his principal place of residence. This program is flag shipped by The United States Department of Housing and Urban Development (HUD). It is federally insured too.
Let us answer some questions that generally surrounds it.
How do I know if I qualify for it?
To be eligible for this HUD plan it is mandatory for the borrower to be 62 years of age or older. The person should have a low outstanding mortgage balance left on his home or should be the legal owner. Moreover the person had undergone HUD reverse mortgage counseling to actually understand what this program actually means. The person applying for it must reside at that house as his primary place of residence.
Can I apply for it if I haven’t bought my house under FHA mortgage insurance?
Yes you can apply for it. The property must meet FHA minimum standards and it does not matter if it is not under the FHA insured plan. The new HUD HECM will be the new FHA insured loan.
What makes a home equity loan and a reverse mortgage different?
To avail home equity loan you must have sufficient income to qualify for it and you need to pay monthly installments to repay it back. The reverse Mortgage program is contrast to it. The program pays you anytime and is actually available regardless of your current income. There is no need to pay any monthly installment as long as you reside at that place. If you have FHA insured HUD home equity conversion mortgage, you won’t be forced to vacate your place if you missed a mortgage payment. This program was designed to make the senior Americans financially stable and prevent foreclosures and increasing bankruptcy petitions among them. With strict North Carolina bankruptcy laws the petition process has become even more stringent.
Does HECM affect ownership?
By availing this program, nothing would happen to your ownership. You would always remain the principal owner of that home can also anytime sell it too. But if you no longer utilize that house as the place of residence you need to repay the cash received through this program with other financial charges. HECM doesn’t bind you and you can also pass the remaining share of your home equity to your heirs.
If you are planning to apply for it and still there are some queries that are restricting you then you can avail reverse mortgage counseling offered by debt management companies. You can search for such companies on the internet.
The author is a noted financial analyst. In this article he explains the questions that surround the HECM program and bankruptcy laws in North Carolina.
Answering Questions That Surrounds the Reverse Mortgage Prog