Did you know the FHA Home Equity Conversion Mortgage (HECM) is the only home mortgage available that has absolutely no personal guarantees to borrowers or heirs? In fact, the home is the sole collateral on the loan.
Even better, did you know there is also only one home mortgage that:
- Cannot be called by the lender regardless of home value? Unlike a home equity line of credit, this loan cannot be called by the lender, regardless of market conditions. You can lock in your available line of credit based on today’s appraised value alone and rest easy in the face of the next recession.
- Contains a line of credit with a government guaranteed rate of growth on the available balance? The available line balance grows at the same rate of interest as is charged on the outstanding balance of the loan, guaranteed by the Department of Housing and Urban Development. Home value less than available line of credit balance? Line of credit balance still grows.
- Has no interest only term, no amortization period or any set term for repayment whatsoever? Make payments if, and when, wanted. But, if payments are made, the available line of credit grows correspondingly, moving an interest charged balance to the growing available line of credit balance.
- May be the perfect hedge against the next housing recession? As the value of the home has no connection to the line of credit available, protect borrowing capacity in any market circumstance. And, did we mention it cannot be called? Compare that to a HELOC…
- Allows up to 12 months to settle the mortgage once the last borrower abandons the home? When the home is no longer the primary residence of the borrowers or is heading for probate, the loan has six months to payoff, with two 90-day extensions if actively marketed. Try that with any other mortgage at a maturity event.
But, even with all these unique benefits, the FHA HECM Line of Credit and HECM for Purchase are mortgages like any other. The borrower maintains the deed and the lender simply holds a lien which needs to be satisfied when the home is no longer the primary residence of the borrower just like any standard “forward” (FHA, Conventional, etc.) mortgage.*
* If you are 62 years of age or older, with sufficient equity in your home, there is no product available that has these benefits… and all with the guaranteed protection of The Department of Housing and Urban Development as long as the borrower maintains the home, keeps current taxes, insurance and other costs of ownership and, as stated, lives in the
Maybe you, or someone you know, needs a similar success story but still thinks the new HUD/FHA Home Equity Conversion Mortgage is too good to be true? As with any loan product, there is always additional information to discuss. Give Richard McWhorter of McWhorter Reverse Mortgage a call, text (404-313-9785) or email ([email protected]) and find out why what you use to know about reverse mortgages is keeping you from one of the best long term financial products on the market today.