Home Equity Conversion Mortgage: The New Kid on the Reverse ...

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Home Equity Conversion Mortgage:? The New Kid on the Reverse Mortgage Block

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Reverse mortgages are becoming very popular these days.? Now there?s a new kid on the mortgage block ? the Home Equity Conversion Mortgage (HECM).? This new option is especially convenient for Baby Boomer home owners who are looking to upgrade or downsize without being saddled by a large mortgage payment.

Overview of the HECM Option

As with most financial programs, there are some basic requirements that you must meet in order to be eligible.?

• First, you must be at least 62 years of age.?
• Secondly, you?ll need enough equity in your current home to cover the remainder of the purchase price of your new home that isn?t covered by the HECM funds.
• No other loans can be used to assist in the purchase of your new home.
• And finally, your new home must be used as your primary residence (i.e. it can?t be for a vacation, weekend or rental home) and you must occupy it within 60 days of purchase

As with most reverse mortgages, it?s the combination of your age and the value of your home that determines how much you can expect to receive.? With the HECM you?ll have full ownership of the new home with no monthly mortgage payments owed.

Basic Advantages to the HECM

Unlike many of the reverse mortgage programs currently available, the HECM program is backed by the Federal Housing Administration (FHA).? This federally insured backing offers an additional level of safety and security for potential program participants.

As it is federally backed, the FHA requires that all HECM applicants participate in a mortgage counseling review.? This review ensures that applicants wishing to take part in the program can not only afford, but also understand all the requirements, risks and benefits associated with the HECM program.

That being said, there are several notable perks to the HECM program:

• There are no credit or income requirements (only age and house equity requirements)
• Once you obtain your new residence, you may remain in it as long as your choose to
• The HECM loan isn?t required to be paid back until you either sell your home or die

How to Start the Process

If you are ready to start the process of applying for an HECM, you should contact Housing and Urban Development (HUD) by phone, in person or via their website.? You can also find out additional information on how to get started at Bank of the Internet ? a fabulous resource for anyone interested in the reverse mortgage option.

Either way, it?s always best practice to consult a qualified financial planner before beginning the process of applying for a reverse mortgage.? A qualified planner will be able to review your situation and guide you through the process of selecting the best reverse mortgage option for you.

Guest post by Rebecca Scott of?Scott Project Solutions, a marketing consultant and blogger focused on all things social media. Follow her on Twitter:?@rscottsocial.

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Source: http://www.howimportantisyourfinance.com/2012/08/28/home-equity-conversion-mortgage-the-new-kid-on-the-reverse-mortgage-block/?utm_source=rss&utm_medium=rss&utm_campaign=home-equity-conversion-mortgage-the-new-kid-on-the-reverse-mortgage-block

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