Who Can Qualify?
There are no income guidelines to qualify for a FHA HECM reverse mortgage because the loan is based on the value of the house and not on the borrower’s ability to repay the loan. In fact, he or she may use the reverse mortgage to generate income. The borrower can choose to receive a lump sum, to get monthly payments or a combination. If the borrower owes a small note, it will be paid off by the new loan before he receives any money.
There Are Some Differences From Regular Loans
The borrower has some requirements he or she must meet which are not associated with a forward mortgage. With a conventional mortgage, the homeowner is not required to maintain the property in any particular condition. With the HECM reverse mortgage, the borrower is obligated not only to keep current the taxes and insurance payments but is required to maintain the property in good condition. The lender wants the home to maintain its value. The lender will collect its loan either upon the sale of the house or the borrower’s death.
What Types Of Properties Will Qualify
The FHA limits the types of properties it will insure under the HECM reverse mortgage program. The borrower must live in the residence. If the borrower moves from the subject property for more than a year, the loan reverts back to the lender. Properties, which qualify for a FHA HECM reverse mortgage, are single family residences, one to four-unit properties, HUD approved condominiums and manufactured homes which meet FHA requirements. The value of the subject property must be within FHA mortgage lending guidelines.
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