The most popular, and one offered through Tidewater Home Funding, is the FHA-backed Home Equity Conversion Mortgage (HECM). A HECM is a non-recourse loan where borrowers will never owe more than the value of the property. A HECM loan may be used on a homeowner’s existing home or on the purchase of a new home. The borrower must pay required taxes, insurance, and if applicable, HOA for all loan options. Additional Reverse mortgage programs include:
Payment of Loan Proceeds: The borrower receives the loan money as a line of credit, monthly installments, a combination or both, a lump sum, or the payment retires an existing mortgage.
Interest Rate: The borrower chooses between a Fixed-Rate or an Adjustable-Rate Mortgage (ARM) loan program. A Fixed-Rate program is only available with the lump sum payment option.
Purchase: Allows the borrower to purchase a principal residence and requires less upfront investment than an all-cash purchase.
Refinance: Allows the borrower to convert one HECM loan into another HECM loan which is usually done to lock in a lower interest rate or to borrower more cash if the home has increased in value.
Some benefits a Reverse mortgage loan program offers includes:
Requirements for a Reverse mortgage loan include:
In addition to program requirements, it’s important to understand the following features of a Reverse mortgage:
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This is not a commitment to lend. All loans subject to program guidelines including credit and property approval. If refinancing an existing loan, the total finance charges may be higher over the life of the loan.