FHA introduces the Reverse home mortgage for seniors looking to get paid monthly after refinancing their home equity. Who wouldn’t want to trade in their mortgage payment for income monthly? Revers mortgage loans provide homeowners with a monthly payment like an annuity.
Does FHA Offer Cash Out for Seniors with the Home Equity Reverse Mortgage?
Most homeowners would jump at that opportunity, but only borrowers at least 62 years of age qualify. Retirement options can improve significantly with these reverse mortgage opportunities. The HECM loan program is an FHA insured reverse mortgage. Credit scores and income have no impact on qualifying for these unique loans.
Seniors Convert Home Equity into Income
Many older Americans today, are realizing the advantages of a reverse home mortgage. A reverse home loan or FHA mortgage conversion loan allows the older American with substantial equity to tap into it using the available funds for many purposes without having monthly mortgage payments.
The borrower gets to remain in their current residence with the option of receiving a monthly payment from the bank or taking a lump sum payment or a combination of both. FHA home loan conversion loans offer flexibility for many situations; whether you own your home outright or not, a reverse home mortgage may be the solution to unforeseen or ongoing financial concerns.
Smart FHA Move for Seniors to Turn a Mortgage into a Paycheck
Smart seniors are taking the reverse home mortgage one step further by using the proceeds to improve the equity in their home. This can happen is several ways but one good example of making your reverse mortgage work for you is using a portion of the available funds to update appliances and implementing other energy efficient products. Using your FHA home conversion loan to improve your homes energy efficiency is a smart move.
Often upgrading your home with new energy efficient products not only saves the consumer money in utility bills, but many of these products can qualify for tax credits or rebates, saving the consumer even more. Big ticket items like new energy efficient windows, solar or tankless water heaters or even an energy efficient roof are all great equity building improvements that can qualify the consumer for both state and federal tax credits and or rebates while adding value to their home. This article was written by Kathy Neilsen.
By using the FHA home equity loan to your advantage, you are increasing the equity in your home, increasing the energy efficiency in your home and saving money on utilities; all without a monthly mortgage payment. Make your homes equity work for you by either cashing out the calculated equity or letting a reverse home mortgage pay a monthly payment. Let your homes equity start working for you today.
An FHA reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), is tailored for homeowners aged 62 and older. This mortgage enables the borrower to transform home equity into income or a line of credit. Repayment is triggered when the homeowner no longer resides in the property. One alternative option is the HELOC loan that provides cash out to senior borrowers, but their is a monthly payment associated with the home equity line of credit.
Key requirements for an FHA-insured reverse mortgage or HECM include:
- The loan is determined by the age of the youngest borrower in case of co-signers.
- Homeowners must undergo consumer counseling and education before HECM loan approval.
- Ownership and primary residence occupancy are mandatory for borrowers.
- Unlike other FHA loans, there are no income or credit qualifications for this loan type.
A current property appraisal is required, as the FHA reverse mortgage is based on the home’s value or the FHA insurance limit, whichever is lower.
Additional features of FHA reverse mortgages or HECM loans:
- Based on prevailing reverse mortgage interest rates.
- Allows financing of closing costs within the reverse mortgage.
- Applicable to single-family homes or up to a four-unit home, occupied by the borrower.
- Permissible for FHA-approved condominiums and manufactured homes.
