A Home Equity Conversion Mortgage (a HECM loan,) is a fancy name for a Reverse Mortgage on your home. Put simply, the HECM type of mortgage is “the Federal Housing Administration’s (FHA) reverse mortgage program which enables you to withdraw some of the equity in your home.” We know you might remember some bad publicity from Home Equity Conversion, but read on and see the latest news–You might be surprised!
Palm State Mortgage Company has given you information on the pros and cons of HECM loans previously. But in this week’s blog, we want to review them again. The Home Equity Conversion Mortgage program has been in the news quite recently. First, let’s review the benefits of a HECM loan.
Home Equity Conversion Mortgages and Their Benefits: Truly a Reversal of Fortune Situation!
1. Like its old name, “Reverse Mortgage,” the mortgage pays you instead of you making payments. But make no mistake, it is actually paying you, your money. The money is a result of a conversion of your home equity into cash. Therefore, you can utilize those funds.
Such Home Equity Conversion Mortgage loans are empowering many senior citizens to live in the here and now. Consequently, these loans are becoming surprising sources of income. This occurs at a time in life when a citizen has become unable to work due to age or infirmity.
2. Once you have decided to take a HECM loan, you can select from several options.
A. You can withdraw some of your equity in a fixed monthly amount.
B. Alternatively, you can elect to take a line of credit. This might enable a senior couple to repair or remodel their older home to better suit the needs of their golden years.
C. Additionally, you can blend the two options. For example, you might want to replace that old heating system before beginning to collect monthly payments.
D. Another, less well-known option is allowing seniors to upgrade or downsize their homes. You can also use the reverse mortgage to purchase a primary residence. This allows you to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.”
Keep in mind that eventually, when you pass away, your equity must be paid off by whomever purchases or inherits the property. Of course there are qualifications and details you must know about this type of loan. The above represents only a sketch of the benefits.
From the Home Equity Conversion Front lines: Hot, Fresh, Recent Breaking News!
The administration has recently applauded the Federal Housing Administration for making improvements in Home Equity Conversion loan programs. The Administration has lauded the efforts FHA has made in improving Reverse Mortgages. Hence, the President praised the efforts that this program is making to find ways to financially help seniors keeping their homes after retirement.
You might remember the flair of popularity of reverse mortgages. You might also remember the sudden bad publicity when some of the loans resulted in stories of personal disaster. Apparently the FHA has addressed and solved these problems and inadequacies in the loan procedures. As a result, the government just recognized “the significant improvements that have been made to the HECM program that reduce risk to the MMI Fund and ensure responsible lending to aging homeowners…”
Rewarding Good Work: High Praise for Improving Programs of Home Equity Conversion Mortgages
But in President Trump’s published and proposed Fiscal Year 2018 budget, he and the Administration strongly requested that the cap be removed so more seniors can enjoy the benefits of the program.
Most noteworthy was the report from the Office of Management and Budget, which has forecast Home Equity Conversion Mortgage means HECM will generate “surplus receipts for the MMI Fund for next year’s book of business.”
The budget-makers also noted, “the HECM program fills a special niche in the national mortgage market and offers critical opportunities for the nation’s seniors to utilize their own assets and resources to preserve their quality of life.” NRMLA President and CEO Peter Bell stated, “The President’s FY 2018 budget and HUD’s accompanying press release reaffirm a national commitment to FHA’s HECM program, which has benefitted more than one million senior households since it was implemented nearly 30 years ago.”
In conclusion, whether the President’s budget passes or not, we at Palm State Mortgage Company are glad to see that this program is recovering from past mistakes. We are happy to see it publicly recognized for its improvements, and moving on from the past to provide better lives for our country’s older generation.