Reverse Mortgages
Reverse Mortgages
There are two main options exclusively for senior home owners to retain ownership while borrowing their home equity without required monthly mortgage payments: Home Equity Conversion Mortgage (HECM) and private label (PL) loan products.
HECM is the most used. Also known as equity release mortgages, senior mortgages, lifetime mortgages, retirement mortgages and most commonly, reverse mortgages, HECM is the U.S. Department of Housing and Urban Development (HUD) regulated, Federal Housing Administration (FHA) insured program that was signed into law by President Ronald Reagan in 1988. It allows homeowners 62 years old and older to either purchase a primary residence with no required mortgage payment, or to refinance their primary residence to pay off their current liens and other mandatory obligations and to access any additional available equity for whatever they wish, with no required mortgage payments. Since its inception, over a million HECM loans have been made to the benefit of senior borrowers. It's usually the best choice for property values up to $800,000.
Most of the features and benefits of HECM and PL loans are comparable with a few more notable exceptions: PL are usually best for property values over $800,000 and they do not provide U.S. government insurance or other protections for non-borrowing spouses like HECM does.
For refinance, HECM loans allow senior homeowners to borrow up to 60% of their property value to pay off existing liens, closing costs and other mandatory obligations, and even take cash out to use anyway they wish with no required mortgage payment until the loan comes due. They retain full ownership of their homes and the loan comes due when the last owner or non-borrowing spouse leaves the home.
For purchase, HECM loans allow senior buyers to purchase their home with as little as 50% down with no mortgage payments. The rest of the HECM feature apply thereafter.
*A reverse mortgage is a home loan for borrowers 55 and older. Borrowers may make mortgage payments anytime during the loan, or make no payments until loan comes due. Paying less than the accrued interest and mortgage insurance premiums (if any) increases amount owed and decreases home equity. Loan is due and payable when the last borrower and qualified non-borrowing spouse leaves the home as their primary residence or sells it. Borrower may be subject to foreclosure for reasons including, failure to maintain the property, and failing to pay property taxes and homeowners insurance. Other terms and conditions apply. Call for details.
NMLS 1432969 (www.nmlsconsumeraccess.com). Life Equity Mortgage is a tradename and trademark of Thomas Capital Corporation (TCC), 1942 Broadway STE 314C, Boulder, CO 80302. TCC conducts business in CO & FL only. Though HECM is a HUD regulated, FHA insured program, TCC is not endorsed by, nor acting on behalf of or at the direction any government agency or program. This website is for informational purposes and is not an application for credit, nor a guarantee of financing. All loan programs are subject to qualification. TCC works with brokers, lenders and financial institutions to offer reverse mortgages and may share your application for credit consideration. Equal Housing Opportunity. ©Thomas Capital Corporation