Most Common Questions and the Answers
Q: What are the HECM and Home Keeper mortgage programs?
A: These
programs are special types of mortgage loans that enable you, as an older homeowner, 62 years of age or older, to tap into
the equity you have in your home while giving you the maximum amount of flexibility to address your particular financial needs
or desires. You may choose a lump sum payment to pay off debt, fix up your home or other expenses. You may wish
to receive regular monthly payments to supplement your income or a line of credit that you can tap into at any time.
You may be able to combine the cash, monthly payment or credit line options if that fits your needs. With the Home Keeper
program you can also get cash to help you purchase a new home.
Unlike traditional home equity lines, no repayment of
the HECM or Home Keeper mortgage is required until you no longer occupy the home as your principal residence. At that
time, the loan becomes due and payable.
With either of these Reverse Mortgage programs, you borrow against the equity
of your home, and receive loan proceeds according to the payment plan that you select. These plans are described on
the following pages. As a borrower, you may change payment plans as many times as you wish, unless you take the full
amount available in a lump sum at closing.
When you sell your home or vacate it for other reasons, the accrued interest
plus what the lender has paid to you or on your behalf through the years is due and payable, usually out of the proceeds from
the sale of your home.
Any proceeds in excess of the amount owed on the loan belong to you or your estate.
Q: How
do the HECM and Home Keeper differ from a home equity loan?
A: While both programs and a home equity
loan enable you to turn the equity in your home into spendable dollars, there are some important differences between the two
types of mortgages. With a home equity loan, you must make regular payments to repay the loan. These payments
begin as soon as the loan is originated. To qualify for such a loan, you must earn a monthly income great enough to
make those payments. If you fail to make the monthly payments, the lender can foreclose, and you could be forced to
sell your home. In addition, you may be required to requalify for a home equity loan each year. If you do not
qualify, the lender may require you to pay the loan in full immediately.
Q: Who is eligible for
a HECM or Home Keeper?
A: You, and any co-borrowers, must be at least 62 years old. The home must
be owner occupied. You must own you home free and clear or with no more debt than could be repaid from
the proceeds of the new reverse mortgage. You must also agree to accept (free of charge) mortgage counseling from a
HUD-approved counseling agency. We encourage family members, friends, or other advisors to attend this counseling session
with you. It is for your protection making certain that you received the correct information.
Q: Must I pay off any loans or liens that are against the property?
A: All
prior loans or liens must be paid off to get a HECM or Home Keeper; but they can be paid off with the proceeds from the reverse
mortgage.
Q: What are the minimum and maximum amounts that I can borrow?
A: There
is no minimum borrowing amount. The maximum amount you can borrow from the HECM plan differs from the Home Keeper.
Both plans factor in the age of the youngest borrower, the expected interest rate, and the “maximum claim amount”
(for the HECM) or the “adjusted property value” (for the Home Keeper). The maximum claim amount or the adjusted
property value is the lesser of the appraised value of your home or the maximum loan amount for a 1 to 4 unit residence as
determined by FHA or Fannie Mae in your area. There is no upward limit on the value of your home.
Q: What
types of payment plans are available with the HECM and Home Keeper?
A: The HECM program offers five payment
options: Term, Tenure, Modified Term, Modified Tenure, or Line of Credit (Cash)
Under the term option, you may
receive equal monthly payments for a fixed period of time selected by you.
Under the tenure option, you may receive
equal monthly payments for as long as you own and occupy the home as your principal residence.
Under the line of credit
option, you may withdraw at times, and in amounts of your choosing, up to the maximum amount of cash available; as long as
you own and occupy the home as your principal residence.
The modified term plan allows you to set aside a portion of
loan proceeds as a line of credit and receive the rest in the form of equal monthly payment for a fixed period of time.
Under
the modified tenure option, you may set aside a portion of loan proceeds as a line of credit and receive the rest in the form
of equal monthly payments for as long as you own and occupy the home as your principal residence.
If you select either
of the term plans, you can remain in your home after the end of the loan term without starting repayment. The same is
true if you have withdrawn the maximum amount under the line of credit or modified tenure payment plan. Remember, repayment
is not required until you no longer own and occupy your home as your principal residence.
With the Home Keeper Mortgage
you have three payment options: (1) Tenure (2) Line of Credit (3) A combination of the two, the modified tenure option.
Q: How
will the amount of the monthly payment be calculated?
A: Your payments will be calculated using the HUD/FNMA
computer software. Factors that affect the amount of money you will receive include: the age of the youngest borrower,
current interest rates, maximum claim amount, and the length of time that you will be receiving payments, whether it be for
a fixed period of time (term option) or for as long as you live in the home (tenure option). The older you are, the
larger your monthly payments are likely to be.
For a free, personalized breakdown of how much money you can receive
with a Reverse Mortgage, please take a moment to send in the Request for Information.
Q: Will HECM
payments affect my Social Security, Medicare Supplemental Security Income, or Medicaid benefits?
A:
HECM payments do not affect your Social Security of Medicare benefits. Those benefits are not based on assets of the
recipient.
HECM advances may be added to your liquid assets under some programs if not spent in the month received,
and may affect your eligibility for some programs. We suggest you consult the local offices for these programs or any
others to determine how HECM payments may affect your particular situation.
The Fannie Mae Home Keeper Mortgage program
provides a basic payment option. The option is similar to the HECM program and does not require an equity percentage
payment to the lender upon repayment of the loan.
Q: Will I have to pay fees to obtain an HECM or
Home Keeper mortgage?
A: No. All closing costs and fees can be financed into your loan.
Both loans have an origination fee, mortgage insurance premium, and other normal closing costs.
Q: Can
I be forced to sell or vacate my home if the money I owe on the loan ever exceeds the value of my home?
A: Absolutely
not, as long as you continue to occupy the property as your principal residence. You cannot be forced to sell or vacate
the property, even if the total amount you owe on this loan exceeds the value of the property; or if the fixed term over which
you received monthly payments has expired. No deficiency judgment may result from your loan. FHA and Fannie
Mae insurance covers any further obligation to the lender.
Q: Will I still have an estate that I can
leave to my heirs?
A: Upon your death, the loan balance consisting of principal paid to you or on your
behalf, plus any accrued interest, becomes due and payable. Your estate may choose to repay the loan by selling the
property or they may want to pay it off by other means so they can keep the home. If the loan should exceed the value
of your property, your estate will owe no more than the value of the property; the mortgage insurance will cover any balance
due to the lender. No additional financial claims may be made against your heirs or estates. You will never owe
more than your property is worth!
Q: If my home appreciates in value during the mortgage term, who
will be entitled to that money?
A: You or your estate are legally required to pay back to the lender
only the outstanding balance due. Any money remaining after the mortgage is paid belongs to you, or upon your death,
to your estate.
Q: What if I decide to sell my home?
A: If you choose to sell
your home, the outstanding balance becomes due and payable to the mortgage lender. Any proceeds left over once the loan
is paid belongs to you.
Q: Can I sell my home to my children and continue to live in it?
A: If
you sell your home to your children or any other individual (or simply give them title), the loan will become due and payable.
After the loan is repaid, any arrangement for your continued occupancy of the property must be made with the new owners.
Q: Is
this a fixed rate loan?
A: There are no fixed rate HECM or Home Keeper loans. Both programs provide
for adjustable rate mortgage plans. The HECM program has both annual and monthly interest rate adjustment options and
both the HECM and Home Keeper programs have interest rate caps for your protection.
Q: Where
can I learn more about Reverse Mortgages?
A: Contact Robin Loomis, your Reverse Mortgage Executive
at:
e-mail: Robin.Loomis@hleloans.com
Toll Free: 800-459-2929
Office: 520-917-5626
Cell: 520-440-4387
