What is the FHA reverse mortgage program? Are federally insured reverse mortgages better for my family? Are HECM and FHA reverse mortgages the same?
A FHA reverse mortgage is a reverse mortgage program that requires the homeowner to have an insurance policy on the reverse mortgage. This type of federally insured mortgage program can only be offered through FHA/HUD approved lenders. When you get a FHA reverse mortgage you are providing the lender an insurance policy that states they will be repaid, regardless. This type of insurance policy encourages lenders to provide reverse mortgage loans. Many times people will find that they can get a better rate from the lender when they have this type of insurance. Compare rates among insured and uninsured programs to see what would make the most sense for your situation.
Are federally insured reverse mortgages better for my family?
When you leave permanent residence of your home, either by choice or by passing away, the loan holder will place your home up for sale to cover the loan amount. Many times, if the mortgage is not insured, the purchase price does not cover the amount still owed. At that time many lenders will attach the amount due to the estate of the deceased. This can leave family members with not only the grief of loosing a loved one, but also a large amount of debt. A federally insured reverse mortgage alleviates this problem. If the home sale does not cover the entire debt, the policy will. The family is not bothered at all.
Are HECM and federally insured reverse mortgages the same?
Yes. Home Equity Conversion Mortgage (HECM) is the FHA/HUD name for a reverse mortgage that is federally insured. A HECM is different than a private reverse mortgage. Privately held reverse mortgages are not insured.
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