HUD Reverse Mortgage Guidelines
Learn How to Qualify for Reverse Mortgage HUD Loans!
HUD Guidelines, A HUD reverse mortgage is simply a reverse mortgage that was created by the U.S. Department of Housing and Urban Development, also know as HUD.
This unique program is the Home Equity Conversion Mortgage, although it is often simply referred to as a HECM reverse mortgage. HECM loans can provide seniors today with a good source of income.
However, a reverse mortgage HUD requires the exchange of your home equity for these HUD loans. If you are interested in this option, here is a closer look at how you can qualify for one of these reverse mortgages.
HUD Reverse Mortgage Loan Program Guidelines For Seniors
Requirements for Borrowers
First, you need to consider the requirements for borrowers if you are considering a reverse mortgage. These HUD loans require that you are least age 62 or older. You also need to own your property or the mortgage balance you have should be very small.
An HECM loan will require that you occupy this property and that it is your principle residence. You are required to go through an information session that will be provided by a HECM reverse mortgage counselor.
In order to qualify, you cannot be delinquent on federal debts either. If you meet these requirements, then this may be an option for you.
Determining the Mortgage Amount
Several things will be taken into consideration when determining the HUD reverse mortgage amount. First, the youngest borrower's age is going to be taken into account when determining the amount of your reverse mortgage HUD.
Interest rates at the time will have an affect too. The insurance premiums you have to pay can affect the amount, and the lesser of the mortgage limits from the FHA, the sales price, or the appraised value of the home will also have an impact.
To qualify for an HECM loan, there are some financial requirements too. The good news is that you don't have to have any employment or income qualifications in order to take out a HUD reverse mortgage.
As long as you retain the property as the principal residence and you meet any obligations of the mortgage, you don't have to worry about repaying these HUD loans. In some cases, the costs of closing may be financed into your mortgage too.
Of course, not only do you have to be eligible for a HUD reverse mortgage, but your property must meet certain requirements as well. Single family homes are eligible for a HECM reverse mortgage.
HUD approved condos are approved, as are manufactured homes that meet the requirements of the FHA. Unit homes that have 1-4 units will qualify too as long as the borrower is occupying one of those units. Just remember, all of these properties have to meet the flood requirements and the property standards of the FHA to qualify.
Various Payment Plans
Various payment plans are available to you when you choose a reverse mortgage HUD. When you borrow against your home's equity, there are five different payment plans to choose from, which affect how you will get this money.
One option is known as tenure. It allows you to get monthly payments that are equal for as long as at least one of the borrowers is alive. Another option is a term payment plan, which offers monthly payments for a certain amount of months. Modified tenure offers a combination of monthly payments and a credit line.
The line of credit option allows you to get installments or payments at any point in time until you exhaust the line of credit. Last, the modified term allows you to combine monthly payments for a certain amount of months and a credit line together. If you need to change the payment option on the HECM loan, it's possible to do so for a $20 fee.
The Costs of an HECM Loan
While everything may sound good to this point, you do need to realize that there are costs to a HUD reverse mortgage. These HUD loans have a variety of fees that are going to cost you. You'll have to pay an origination fee. This may be up to $2500 on homes that are worth less than $125,000.
However, homes that are worth more than that may be charged a fee of up to 2% of up to $200,000 and then 1% on the amount that goes over this amount. Closing costs must be paid as well, which can include recording fees, title search, surveys, mortgage taxes, appraisals, inspections, and even credit checks. Other fees that may cost you include servicing fees, interest, and mortgage insurance premium.
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