Taking out a Home Equity Conversion Mortgage could be confusing and overwhelming. With plenty of tips, though, you should do fine. Read along to learn some of the basics.
You need to be 62 years of age
Only people who are 62 years or older qualify for this type of loan. Older homeowners can get larger loan amounts versus younger homeowners. So, if you and your spouse are both co-signers on the loan and your spouse is younger than you, then that would definitely affect the amount you can borrow.
Age is not the only element taken into account, though. The value of your home and the equity acquired have more weight when it comes to determining the amount of the loan you could get approved for. Therefore, the higher home value, the larger amount of your loan when applying for a HECM for purchase.
Things to keep in mind
Be sure to learn about all the fees involved in the process, as there are many. You need to make sure your property taxes, insurance premiums and even homeowner’s dues are paid for. Otherwise, the lender could request for a repayment right away.
If you declare bankruptcy, live out of the home—it needs to be your primary residence for the agreement to work—or commit a crime like fraud, then the lending company is going to request for repayment—soon. Therefore, keep in mind the terms and conditions of this type of mortgage so you don’t have to be rushed into repayment.
Also, don’t undermine the risks. Careful planning and afterthought are necessary if you want to use a reverse loan to suit the unique financial needs of any situation. However, you should know the risks well enough. That way, you’re fully aware of what you’re potentially giving up and compare it to what you have to gain in exchange.
Call a consultant
An HECM consultant can help you sort it all out. From reviewing lists of prospective lending companies to helping you nail the all the details, choosing the right lender is easy when you’ve got help.
So, learn as much as you can about this loan. Sufficient knowledge can help you figure out the best way to manage it.
For more information on our HECM for purchase, contact Longbridge Financial today.
