A type of loan which can convert a part of your real estate properties such as home and condominium into cash money is called the home equity conversion mortgage (HECM) or reverse mortgage loan. There is no monthly payment needed, however there will be some interest being charge, but it will be paid back by selling the property when the homeowner is deceased or moves out permanently. Reverse mortgage is what you need to have a continuous flow of income. Such loan is very helpful in supporting your daily expenses, home improvement projects, running a new business and so on.

You can get the loan advances in a lump sum or in monthly payments, depending on your decision. Nonetheless, to qualify for a HECM loan there are some requirements that we need to meet up with. First, it is compulsory for us to be an American and secondly, we must be aged 62 years old or above. And of course, we need to own a home that we’re living in there permanently. Then, you have to pass on your every detail and any special needs to a HECM advisor. Even if the current real estate is not from Federal Housing Administration (FHA), people can still apply for their loans.

People often wonder why such loans are different from those regular bank loans. First, obviously you have to meet the requirements as stated above. Second, the lender will not bother to ask about your income or credit information because the loan is taken against your home equity. And third, getting a loan from FHA means that you will not be forced to move out and your house will be safe from being foreclosed whenever you failed to pay the mortgage payment. All you need to do is keep the house in a reasonably good condition, make sure all your taxes as well as homeowners insurance are paid.

Finally, you may ask how much money can people get from HECM loans. They simply let you borrow more money by appraising a higher value of your home with lower interest rate when you are older. Reverse home mortgage does have more benefits than you know, such as tax influences and many other minor details which will be explained to you when you meet your advisor. Use an online mortgage calculator to find out the amount of reverse mortgage fees that you may need to cover when applying for it.

Last but not least, no matter how good a deal is, there might still have pitfalls and disadvantages. It is always good to exchange opinions with your family, financial advisor and experienced people beforehand.

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