Home Equity Conversion Mortgage (HECM)

Reverse Mortgages as a Home Equity Conversion Mortgage (HECM)

Funds Available, Distribution Options, Interest Rates and Costs

Most closing costs and fees can be financed as part of the loan, resulting in little or no upfront fees (except for HUD required counseling).
The funds available to you may be restricted for the first 12 months after loan closing, due to HECM requirements. Consult your advisor for detailed program terms.
Receive your funds in a lump sum, a regular monthly payment, a credit line, or a combination of these options.
Amount available is based on the age of the youngest borrower or non-borrowing spouse, current interest rates, existing mortgage amount, and the lesser of the appraised value of your home, sale price or the maximum lending limit.
Fixed and variable loan rates may be available.

Eligibility

At least one homeowner must be at least 62 years old
Must have sufficient equity in your home
Single family home, two to four unit owner occupied home, townhouse, approved condominium or permanently affixed manufactured home

Benefits

Eliminates existing monthly mortgage payments. You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, HOA fees and maintain the home according to Federal Housing Administration requirements.
Stay in your home and maintain the title
Heirs inherit any remaining equity after paying off the HECM loan
Federal Housing Administration (FHA) insured HECM Loan Program
Loan proceeds are tax-free (Please consult your financial advisor)

Forward Mortgages vs Reverse Mortgages

Forward Mortgage,Lender requirements:

Good credit ratings as well as total debt limits.
The borrower pays upfront costs, such as closing costs and down payments, and the monthly house payment.
When applying for forward home loans, applicants must show proof of income and assets.
The homeowner is responsible for taxable income and property taxes.
Substantial indications are required that an applicant will be able to make payments on their homes.

Reverse Mortgage Lender Requirements:

At least one homeowner must be at least 62 years old
Must have sufficient equity in your home
Single family home, two to four unit owner occupied home, townhouse, approved condominium or permanently affixed manufactured home

Physical property and equity already paid can serve as collateral in a reverse mortgage. Reverse mortgages are federally insured (FHA) and offer homeowners and heirs additional benefits.

Home Equity Conversion Mortgage (HECM), is A FHA insured loan and used for 95 percent of all reverse mortgages. Consequently, Colorado reverse mortgages are often a better choice for those who qualify. Traditional loan costs increase over time; reverse mortgage costs decrease. To calculate the Total Annual Loan Cost or TALC, ask your mortgage professional for a helpful form similar to the APR of a traditional loan.

For information about creative solutions for home loans, reverse mortgages, and other mortgage products used to develop housing, businesses, industries, and cooperatives, call Taylor Mortgage Group at 303-339-5950 or Janie Taylor directly at (303) 884-9393.

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