A lot of seniors are making the most out of their home equity by taking out a reverse mortgage. A reverse mortgage loan lets homeowners who are at least 62 years old to access part of their home equity and have it converted to cash.
The most common reverse mortgage Myrtle Beach is the Home Equity Conversion Mortgages (HECM) loan. It is insured by the Federal Housing Administration, which strictly regulates the HECM loan requirements to protect lenders and borrowers. If you are interested in taking out such a loan, the first thing you have to do is to learn the basics.
Can I lose My Home?
The simple answer is yes. But this will only happen on certain situations.
- You no longer live in your house as your primary residence. Perhaps you’ve moved or sold your home. You haven’t been home for more than 12 consecutive months or you passed away and your partner or spouse was not listed on the reverse mortgage loan as a non-borrowing spouse or coborrower.
- You stopped paying your homeowner’s insurance and property taxes.
- You failed to maintain your house according to the requirements set by the FHA.
If you failed to meet the requirements than a lawn default could be triggered and it may lead to foreclosure.
What Are Your Reverse Mortgage Loan Obligations?
When you get an HECM loan, you have to meet a certain set of conditions if you want your loan to remain in good standing.
- You have to complete a counselling session as mandated by the Department of Housing and Urban Development or HUD.
- You should continue owning and residing in the house as your primary residence.
- You must continue to pay the homeowners insurance and property taxes.
- You should maintain your house based on the requirements set by the FHA.
As time goes by, the media has featured the unfortunate situations of seniors who have lost their houses with a reverse mortgage loan. But it never emphasized that the FHA and reverse mortgage lenders don’t want their borrowers to lose their homes.
If you want to make an informed decision, HUD will require you to undergo mandatory reverse mortgage counseling by a third party HECM counselor, as it is part of the application process for this kind of loan. The counselor will discuss the requirements for program eligibility, financial implications, as well as the alternatives to getting an HECM loan, and the provisions for the mortgage loan become due and require repayment.
Back in 2015, the Financial Assessment regulation was presented to the reverse mortgage program to lower the number of potential borrowers defaulting on this type of loan. The lenders need to determine your ability to meet insurance and ongoing tax obligations by checking your housing and credit history to find any probable financial concerns.
Each borrower has their own unique financial circumstances. In case you are considering a reverse mortgage, call Reverse Mortgage Specialist now.
Reverse Mortgage Specialist
1293 Professional Drive, Suite 204
Myrtle Beach, SC 29577