What protections does a HECM come with?

• Counseling: You must be counseled by an independent financial counselor about the risks and benefits of taking a HECM before a lender can start to process your application. Like any financial product, if a HECM is not suitable for your circumstance, the result may be a great deal of stress and unhappiness. Very few products […]

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What can I use the proceeds of a HECM for?

If you now owe any money on a debt against your home or any other Federal obligations, you would have to payoff those amounts to get a HECM.You could use money from the HECM to do that. Any remaining funds you can use as you wish. There are no restrictions. The proceeds from a HECM […]

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What does Counseling involve?

The Department of Housing and Urban Development (HUD) certifies housing counselors around the US to help homeowners with impartial education about HECMs. Counseling is a mandatory part of the HECM application process and is usually completed after submitting an initial application for a HECM to a lender. Even though the application has been completed, the […]

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How do I Qualify for a HECM?

You must be 62 years or older. All borrowers on property title and the HECM must also be 62 years or older. And because a HECM must be, under the rules, a first position mortgage on your primary residence (and with some exceptions, FHA will not generally allow a debt to be subordinated to it), […]

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What types of homes are eligible for the HECM program?

FHAeligible property consisting of: 1. 1-4 unit home 2. Possibly a manufactured home constructed after 1976. However, due to collateral value issues, not all lenders accept manufactured homes. 3. Condominiums approved by the Department of Housing and Urban Development (HUD) 4. Co-operatives on a case by case basis.In general, co-ops are not acceptable collateral. 5. […]

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How does a HECM work?

A lender will appraise your residence. The value that will be used will be the lesser of the sales price (if being purchased), $636,150 (the Federal Loan Limit) or its actual appraised value. It must be your primary residence. Based on the age of the youngest borrower aged 62 or older on title (or if […]

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How do borrowers use HECMs?

Most borrowers take a simple line of credit to have for emergency funds or help with daily expenses. But many borrowers also us a HECM for the reasons below: a. Pay an existing mortgage off. b. Create a monthly annuity payment. c. Refinance an amortizing HELOC. d. Buy a new, more “age-in-place” appropriate, home with […]

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Do HECMs impact Government Assistance Programs?

With the growing number of homeowners choosing a HECM, many are also concerned about the impact of this option on their eligibility for Social Security, Medicaid, or Medicare. A HECM does not affect the homeowner’s Medicare or Social Security coverage. However, if you have Medicaid, this might be a little more complicated. Medicare is the […]

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When is a HECM “Due and Payable”?

The HECM is Due and Payable (i.e. a demand is made upon you or your heirs for repayment) upon a Maturity Event. A Maturity Event occurs when: • All borrowers have passed away • All borrowers have sold or conveyed title of the property to a third party • The property is no longer the […]

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