Home Equity Conversion Mortgage (HECM) Frequently Asked Questions
Q. Since federally-insured HECM loans are regulated by the U.S. government, are all HECM loans the same?
A. Yes and no. All HECM lenders must follow HUD rules and many of the loan costs, including the interest rates, will be the same no matter which reverse mortgage lender you choose.
Q. What are the eligibility requirements for a HECM loan?
A. You, and any other current owners of your home, must be aged 62 or older. The home must be your primary residence. It may be either a single-family residence in a 1- to 4-unit dwelling, a condominium, or part of a planned unit development (PUD). Though some manufactured housing is eligible, most cooperatives and most mobile homes are not. The home must be at least one year old and meet HUD's minimum property standards*. Finally, you must agree to discuss the program with a counselor from a HUD-approved counseling agency.
* Note: If the house is not up to HUD's standards, you may use the HECM loan to pay for repairs that may be required to bring it up to their standards.
Q. Does the location of our home also affect the size of a HECM loan?
A. Yes. The size of a HECM loan depends on the maximum lending limit, which varies by county and is adjusted annually.
Q. Are there any advantages by taking my HECM loan as a line of credit?
A. Yes. That's because a HECM line of credit continues to grow over time, increasing the amount of cash available to you until you withdraw all of it. That is possible because the remaining balance in your line of credit grows by the same total rate that is charged on your loan balance.
Consider this example. Say you have a HECM line of credit of $150,000 and you withdraw $25,000. The remaining line of credit would be $125,000. If your next withdrawal is a year later you would have more than $125,000 available to you. Here's how it works to your advantage: if the total loan rate is, for instance, 6%, your available credit line would be 6% higher than it was a year earlier. Instead of having $125,000 available you would have $132,500 in your line of credit (6% of $125,000 = $7,500). In this example, you would have an extra $7,500 available to you in year two of your reverse mortgage. A nice added bonus.
Q. How are the interest rates computed for a HECM reverse mortgage?
A. The HECM rates are based on the T-Bill (U.S. Treasury bills) interest rate plus margin. It is adjusted either monthly or annually, or the rate can be fixed for life.
Q. Are HECM loans available throughout the U.S. ?
A. HECM loans are available in all 50 states, the District of Columbia , and Puerto Rico . (HECM credit line options are available in all states except Texas .) HECM fixed rate loans are available in most states.
Fannie Mae Home KeeperŪ Reverse Mortgage: Frequently Asked Questions
Q. What types of homes are eligible for a Fannie Mae Home KeeperŪ reverse mortgage?
A. Home types eligible for Home Keeper reverse mortgages include single-family homes, condominiums, and units in qualified planned unit developments.
Q. In what ways may I receive money from a Home Keeper reverse mortgage?
A. You may choose to receive money from a Home Keeper reverse mortgage in the same way you may receive funds from a HECM loan: as fixed monthly payments for life (i.e., for as long as the borrower occupies the home as his/her principal residence; as a line of credit with no growth; or a combination of monthly payments and line of credit).
Q. How are the interest rates computed for a Home Keeper reverse mortgage?
A. The HECM rates are based on the variable CD (Certificate of Deposit) interest rate plus margin and is adjusted monthly.
 Senior Finance Network - 100 East Linton Blvd., Suite 206A - Delray Beach, FL 33483 Office Phone: 561-807-5444 Fax: (561) 516-6070 Toll Free Phone: 877-448-6614 Email: wk@seniorfinancegroup.com Email: wknowles@fcmortgageonline.com
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