Enhance your financial security
with a Home Equity Conversion Mortgage
Unlock Your Home’s Equity
We understand that you want to transition easily into the retirement lifestyle of your choice. We are here to help you access a portion of your home’s equity and make the most of your retirement years.
Explore Your Options
Whether you are planning on retiring soon or have already started retirement, take a moment to think about how you envision your retirement lifestyle. Even if you have planned, saved and invested carefully, you may have fewer funds than you had expected to meet your goals. Now is the time to consider all of your financial options and make the right decisions for your future.
A HECM Loan Defined
A Home Equity Conversion Mortgage (HECM), commonly known as a
reverse mortgage, is a Federal Housing Administration (FHA) insured loan which enables you to access a portion of your home’s equity to obtain tax-free funds without having to make monthly mortgage payments.2 If you are 62 years of age or older and have sufficient home equity, you may be able to get the cash you need to:
- Pay off your existing mortgages
- Continue to live in your home and maintain the title
- Pay off medical bills, vehicle loans or other debts
- Improve your monthly cash flow
- Fund necessary home repairs or renovations
- Build a “safety net” for unplanned expenses
A Few of the Loan Benefits
- Eliminates your existing monthly mortgage payments
- You can stay in your home and maintain the title
- Loan proceeds are tax-free and can be used any way you choose
- Heirs inherit any remaining equity after paying off the HECM loan
- The HECM loan is FHA insured
- Consult your financial adviser and appropriate government agencies for any effect on taxes or government benefits.
- You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements.
- Your current mortgage, if any, must be paid off using the proceeds from your HECM loan.
- Not applicable to HECM for Purchase
To be eligible for a HECM loan, some key requirements are:
- The youngest borrower must be at least 62 years of age
- You must live in your home as your primary residence and have sufficient equity
- Be able to pay off your existing mortgage using the HECM loan proceeds
- Live in a single family, two to four unit, owner-occupied home, townhouse, FHA approved condominium or manufactured home Requirements
In addition to eligibility, you must meet the following conditions to obtain a HECM loan:
- Complete a HUD approved counseling session
- Maintain your home according to FHA requirements
- Continue to pay property taxes and homeowners insurance
Types of Loans
There are two types of Home Equity Conversion Mortgage (HECM) loans. It is important to select the one that best meets your needs.
The HECM is available as either an adjustable- or fixed-rate loan. With the adjustable rate, the rate is adjusted monthly based on the LIBOR (London Inter Bank Offered Rate). The fixed-rate HECM maintains the same interest rate over the life of the loan.
HECM for Purchase Loan
The HECM for Purchase can help homeowners buy their next home without having to make monthly mortgage payments. This loan enables homeowners to use the equity from the sale of a previous residence to buy their next primary home in one transaction. Repayment is deferred until the borrower dies, sells the home, moves out of the house, or defaults on other obligations such as insurance or taxes.
Determining Your Proceeds
The amount of funds available, also known as the Principal Limit, from a HECM loan is determined by:
- Age of the youngest borrower
- The lesser of the appraised value of your home, sale price or the FHA national lending limit
- Current interest rates
- Balance of your existing mortgage, if applicable, and all mandatory obligations as defined by the HECM requirements
The funds available to you may be restricted for the first 12 months after loan closing, due to HECM requirements. Consult your reverse mortgage adviser for detailed program terms.
With a fixed rate HECM loan, you can receive the cash in a lump sum. With an adjustable rate HECM loan, you can select:
Equal monthly payments as long as at least one borrower lives in and continues to occupy the property as a principal residence.
Equal monthly payments for a fixed period of months selected by the borrower.
Line of Credit
Unscheduled payments or installments, at any time and in an amount of your choosing until the line of credit is exhausted.
Combination of line of credit plus scheduled monthly payments for as long as you remain in the home.
Combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
A single payment.
Borrowers may access a minimum of 60 percent of the principal limit amount for the first 12 months after loan closing. Borrowers may be eligible to access an additional 10 percent, subject to additional HECM requirements, of the principal limit amount for the first 12 months after loan closing.
Once your loan funds and all existing mortgages and fees are paid, you are free to choose how you want to spend the remaining loan proceeds. This could include anything from paying off debt, funding medical expenses, stretching your retirement savings, remodeling your home or building a “safety net”; spend it however you like.
A HECM loan has built in safeguards that protect you and the home.
Federal Housing Administration (FHA) Insured
HECM loans are FHA insured. You are always protected against lender insolvency and can expect to receive your proceeds.
Mandatory Mortgage Insurance
HECM loans are required by U.S. Department of Housing and Urban Development (HUD) to charge a mandatory mortgage insurance. This insurance protects the borrower and their heirs in the event the loan balance is higher than the home’s value at the time of sale.
Independent counselors which are approved by HUD provide you with objective information, and help you understand the process.
Capped Interest Rates
If your loan has an adjustable interest rate, there is a limit on how much some interest rates can change during a specific period of time.
Full Disclosure of Costs
Lenders are required to disclose your estimated loan costs and fees upfront through a Good Faith Estimate (GFE).
Three Days to Cancel
After signing your loan paperwork, you have three business days to cancel the loan. This “Right of Rescission” applies to the HECM for Refinance Product, but does not apply to the HECM for Purchase loan.
If you would like to hear how safe and easy it is to use your equity as a financial safety net, please call us today at 205-987-2350 for a free, no obligation consultation. Mortgage Linc. is one of the most respected provider of reverse mortgages in the State of Alabama.
- NO change of ownership of your home
- NO financial worries
Reverse mortgages are ideal for homeowners who are retired or no longer working and need to supplement their income. Interest rates can be fixed or adjustable and the proceeds do not interfere with Social Security or Medicare benefits.
Why Mortgage Linc?
Mortgage Linc has been in the reverse mortgage business for quite some time in Alabama. Mortgage Linc is an independent mortgage broker. This is an advantage to our clients because we are not tied to any single lender.We are an approved mortgage broker with 6 different lenders, each having slightly different programs to choose from.
If you have any questions or would like more information regarding Reverse Mortgages, please call us at 205-987-2350 or fill out the form below:
“These materials are not from HUD or FHA and were not approved by HUD or a government agency.”