HECM-what does it mean?Topic: Mortgage
A type of reverse mortgage which allows converting the portion of the home equity into cash today named as HOME EQUITY CONVERSION MORTGAGES. The homeowner can stay in the home while the homeowner uses the home equity. With the cash, the homeowner can use the cash into any expenses such as medical, home improvements, and home repairs.
This reverse mortgage type is one of the three basic reverse mortgage types. It is also known as Federally Insured Reverse Mortgage. Hence, Federal Housing Administration (FHA) backs the Home Equity Conversion Mortgages. The FHA works under the US Department of Housing and Urban Development (HUD).
The banks, credit union, mortgage companies, and savings and loan companies can provide the services. FHA must approve the financial institution before the financial institution can offer this type of reverse mortgage.
There are four requirements for homeowner to quality. First, the homeowner must be sixty two years old or over. Second, the home is a principal residence of the homeowner. Third, the homeowner received reverse mortgage counseling. Fourth, the homeowner owns the home. Or, the home is almost paid off.
The reverse mortgage counseling is a free counseling from HUD. The HUD wants the homeowner to know the consequences, and benefits before the homeowner uses the reverse mortgage. For a while, the homeowner pays for the reverse mortgage counseling. Now, the HUD instructed the financial institution to deal with homeowner that dealt with free reverse mortgage counseling only.
There are five requirements for the home to qualify. First, the home is a principal residence. Second, the home can be a single family residence. Third, the home can be one to four units as long as the homeowner occupies one unit. Fourth, the home is manufactured or mobile home. Fifth, the home is FHA condominiums.
The maximum claim amount of reverse mortgage depends on the age, home value, and interest rate. For example, the interest rate is nine percent. The homeowner who is sixty five years old can use twenty six percent of home equity. The homeowner who is seventy five years old can use thirty nine percent of the home equity. The home owner who is eighty five years old can use fifty six percent of the home equity.
The homeowner receives the home equity in the form of monthly payment, credit line, lump sum payment, or combination. The home secures the reverse mortgage. The homeowner do not repay as long as the homeowner lives in the home. The homeowner still owns the home. Nevertheless maintenance, property tax, insurance are still the responsibility of yours.
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I think credit is kilnilg America however we need it to keep the economy afloat so it is very tenuous, ie who could buy a new car for cash, no one or very few so we need credit. Tax advantaged credit ie student loans and mortgages are not so bad and at low rates, it is using the banks money to build wealth but credit cards etc are evil.No credit is not bad and easily fixable bad credit is bad and should be avoided at all costs. As a credit manager I'd give it to the no credit guy as he has a solid job and has never shown any reason to doubt him, why make him guilty before he has done anything wrong, the bad credit guy has proven he will not pay at least one time in his life, so he has a track record.By the way, I have bad credit as part of trying to start a small business so you'll see I am not prejudiced.
Fixed rates are usually much, much hieghr than flexible. I'm not sure your HELOC is best spent on your mortgage, especially considering that you guys have the lovely MID thing going on. I'm assuming that your income bears your mortgage okay already. You are effectively mortgage cycling almost, you'll own your house but still have a net worth problem doing that. It's sort of an eggs in one basket technique. I'd be inclined to diversify a bit, but you should get a second opinion. It just seems rushing to effectively get rid of a tax write off (mortgage interest) when you may not need to, may not be the best thing at all.How low can you fix your rates? What will your income bear? Your rate increase tolerances? If we're only talking about a few thousand per year, is the headache even worth it to you? Lots of questions to consider.Oh that was presumptuous. The US lets you write off mortgage interest, Canadians have to do the fancy Smith Manoeuver to get the same effective thing going on.
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