Since , FHA has allowed HECM servicers to put borrowers who are behind on property charges onto repayment plans to help prevent foreclosures, but as of fiscal year-end , only about 22 percent of these borrowers had received this option.
FHA also has not established comprehensive performance indicators for the HECM portfolio and has not regularly tracked key performance metrics, such as reasons for HECM terminations and the number of distressed borrowers who have received foreclosure prevention options. Additionally, FHA has not developed internal reports to comprehensively monitor patterns and trends in loan outcomes.
As a result, FHA does not know how well the HECM program is serving its purpose of helping meet the financial needs of elderly homeowners. HECM loans can be used for any purpose.
HECMs and proprietary reverse mortgages may be more expensive than traditional home loans, and the upfront costs can be high. How much you can borrow with a HECM or proprietary reverse mortgage depends on several factors:.
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. 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 also must explain the possible alternatives to a HECM — like government and non-profit 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.
You can visit HUD for a list of counselors , or call the agency at With a HECM, there generally is no specific income requirement. However, lenders must conduct a financial assessment when deciding whether to approve and close your loan. If this is not required, you still could agree that your lender will pay these items. You are still responsible for maintaining the property. HECMs generally give you bigger loan advances at a lower total cost than proprietary loans do.
In the HECM program, a borrower generally can live in a nursing home or other medical facility for up to 12 consecutive months before the loan must be repaid. Taxes and insurance still must be paid on the loan, and your home must be maintained. With HECMs, there is a limit on how much you can take out the first year.
Your lender will calculate how much you can borrow, based on your age, the interest rate, the value of your home, and your financial assessment. Generally, you can take out up to 60 percent of your initial principal limit in the first year. There are exceptions, though. Decide which type of reverse mortgage might be right for you. That might depend on what you want to do with the money. Compare the options, terms, and fees from various lenders. Learn as much as you can about reverse mortgages before you talk to a counselor or lender.
Is a reverse mortgage right for you? Only you can decide what works for your situation. A counselor from an independent government-approved housing counseling agency can help. This is especially true if he or she acts like a reverse mortgage is a solution for all your problems, pushes you to take out a loan, or has ideas on how you can spend the money from a reverse mortgage.
You'll have the information you need to make informed decisions. Skip to main content. Office of Hospital Facilities Why Choose ? Overview of Lean Why Choose ? How it Works - The difference between a reverse mortgage and a home equity loan - The various types of reverse mortgages - Fees and costs associated with reverse mortgages - Financial and tax implications Things to Consider - Are you 62 or older?
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