An Overview of the HECM Program for Suffolk County Homeowners
If you are a Cold Spring Harbor, NY homeowner who is approaching the age of retirement and are looking for a way to improve your financial situation, a reverse mortgage loan may be the right option for you. At Senior Reverse Network, one of Suffolk County’s most trusted reverse mortgage companies, our team of experts have helped dozens of residents throughout the area take advantage of the equity in their homes and secure their financial stability. If you are interested in learning more about the reverse mortgage process, get in touch with Senior Reverse Network today. Our licensed reverse loan officers can help you secure your finances, ensure your peace of mind, and make the most of your retirement.
What is a HECM Reverse Mortgage?
If you’re nearing the age of retirement, like many Suffolk County homeowners, you may have mixed emotions. After years of working, you’re looking forward to some much-needed and well-deserved rest and relaxation. However, you likely have some concerns, too; namely, your finances. With the ever-increasing cost of living in Cold Spring Harbor, NY, you’re likely wondering how you are going to sustain. Fortunately, if you’re a homeowner, there’s a way that you can improve your financial situation, ease your concerns, and make the most of your retirement. How? – With a HECM reverse mortgage.
A reverse mortgage is a special type of loan that is specifically designed for homeowners who are at least 62 years of age and own their homes outright or have a small balance remaining on their mortgages, and have a sizeable amount of equity in their properties. With this type of loan, you withdraw a part of the equity that you have built-in your home, which can be disbursed as a lump sum, as a line of credit, as a fixed monthly payment, or a combination of these three options. Unlike a standard “forward” mortgage (the type you took out to purchase your home), which has to be repaid on a monthly basis, the proceeds from a reverse mortgage don’t have to be repaid until you permanently leave your home. Reverse mortgage providers offer several different three types of reverse mortgage programs: single-purpose, proprietary, and Home Equity Conversion Mortgages (HECM); the latter is the most popular option.
A HECM is a federally-insured reverse mortgage that is backed by the U.S. Department of Housing and Urban Development (HUD). A HECM is considered a non-recourse loan, which means that the maximum amount that you will have to repay is the value of your property. If the value of the property does not equal the balance of the loan when it becomes time to repay it, the Federal Housing Administration (FHA) will cover the portion that the property value does not cover. Unlike other types of reverse mortgage loans, there aren’t any income limitations or medical requirements for a HECM and the proceeds from this type of loan can be used for any purpose. For these reasons, HECMs are the most popular reverse mortgage loans.
How does a HECM Work?
Typically, with privately-sponsored reverse mortgages (known as proprietary reverse mortgages), terms and conditions vary and they can allow homeowners to borrow a larger amount than a HECM; however, generally, the interest rates are high. A single-purpose reverse mortgage, which is sponsored by a state, local, or non-profit agency, the rates may be lower, but you likely won’t be able to access as much equity and the funds can only be used for specific purposes. With a HECM, the interest rates are usually much lower than a proprietary reverse mortgage and you can use the proceeds anyway you wish. The amount of proceeds from the equity in your home that you will be able to access through a HECM varies and depends are several factors, including:
- The age of the youngest borrower or the spouse of the homeowner who is not borrowing the loan
- The value of the property
- The expected interest rate (EIR)
- Whether you choose a variable-rate or fixed-rate HECM reverse mortgage loan
Typically, the amount of the proceeds that can be accessed ranges between 45% and 55% of the value of the borrower’s home, and older borrowers are usually eligible for a larger amount than younger borrowers. The HECM is a unique and versatile financial tool, as it can be customized to meet your specific financial needs and goals. You can choose to have the proceeds from your home’s equity distributed in a single lump sum, as a line of credit, as a fixed monthly payment, or as a combination of any of three options, and, as mentioned, you can use the funds any way you see fit.
As long as at least one of the borrowers or a non-borrowing spouse remains in the home that the loan was taken out against and continues to pay other costs that are associated with the home and the loan (property taxes, maintenance, etc.), mortgage payments will not need to be made. The loan becomes due when you sell or permanently move out of your home, or when you pass away.
Who is Eligible for a HECM?
You can only obtain a HECM from reverse mortgage lenders who offer products that are sponsored by the FHA. Additionally, in order to be considered eligible for a HECM, you must meet the requirements that are set forth by the FHA. The home you are looking to borrow equity from must be your principal residence, and you must also:
- Be at least 62 years of age
- Own your home outright or have a small balance remaining on your mortgage and a sizeable amount of equity in the home
- Not be delinquent on any other federal loans
- Have the means to continue making timely payments on other ongoing financial obligations that are associated with your home, such as property taxes, homeowner’s insurance, and homeowner association (HOA) fees
- Complete a consumer information counseling session offered by an FHA-approved and licensed HECM counselor
In addition to these requirements, your home must be one of the following:
- A single-family property or a 1 to 4 unit property and you must live in one of the units
- A HUD-approved condominium
- A manufactured house that meets FHA requirements
Your home must also meet all property standards and flood requirements that are established by the FHA.
The Benefits of a HECM Reverse Mortgage Loan
A HECM is a unique financial tool that you can use to help prepare for retirement. This type of loan offers several features that may be beneficial to you. Some of the top benefits of a HECM include:
- You can secure the financial resources you need to supplement your income during retirement and can use the funds any way you wish.
- You do not have to make any monthly mortgage payments.
- You will remain the owner of your property and will continue to live in it,
- The loan is federally insured. If the amount due for the loan is more than the value of your property, the FHA will make up the difference.
- The loan can be customized to meet your unique financial needs.
Interested in Learning More About HECM Reverse Mortgage Loans?
If you are a Cold Spring Harbor, NY homeowner who is at least 62 years of age or close to it and you are interested in learning more about the HECM program, contact one of the most trusted reverse mortgage lenders in Suffolk County: Senior Reverse Network. To schedule an appointment with one of our knowledgeable and friendly associates, please call 800-985-7383 or visit www.srnreverse.com. The team at Senior Reverse Network is looking forward to helping you make the most of your retirement.
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