What the Heck is a HECM? Get a Free Reverse Mortgage Guide To Avoid Common Pitfalls
It’s not easy to make sure that you’ll have plenty of money to live on in retirement. Many people work hard throughout their lives, and then retire only to realize that money is too tight to allow them to do the things that they’ve always dreamed about. Whether you’re really struggling to keep up with your expenses or you’d just like to have a little extra cash on hand, a reverse mortgage Irvine might be a good solution. Before you actually sign anything, though, you should make sure that you have a good understanding of what you’re doing.
Why are people so excited about reverse mortgages?
A reverse mortgage in general is an arrangement where a bank loans you some money against the equity in your home, with the expectation that it will be repaid when you stop living in the home for any reason. It’s an attractive option because you don’t have to worry about the loan potentially causing you to lose the house, as might be the case with something like a typical home equity loan. Many of the people taking these loans do it because they know the house will just be sold when they either pass away or move into a retirement community anyway. Then, the proceeds of the sale can be used to repay what is owed.
Is an Irvine HECM the same as a reverse mortgage?
An HECM is a Home Equity Conversion Mortgage. This is the specific type of reverse mortgage that’s insured by the Federal Housing Administration. The basic concept is the same, but some of the details differ in important ways. These loans often have tighter limits on how much you can borrow, but the interest rate is typically lower than you’d find in other reverse mortgages. Whether it’s a better option for you overall depends on how much longer you expect to live in the home, and how much money you really need.
One of the big advantages of this approach, though, is that the FHA guarantees that you or your estate can never end up owing more than the value of the home. Even if the market changes such that the value of the home becomes less than the amount you borrowed, you won’t be responsible for the difference.
What if you don’t already own a home?
Though more people are now aware that these loans are an option, many people don’t realize that you can take advantage of them even if you’re not yet a home owner. You can do this through a reverse mortgage purchase. That is basically an arrangement that the FHA offers, where you buy the home and take out the reverse mortgage against it in the same transaction. In effect, it means that a portion of the money you pay for the home purchase immediately comes back to you as a loan. For some people who fear buying a home during retirement would leave them without the liquid assets they need to keep up with their expenses, this can be a valuable option.
These loans can be an excellent financial move for many older people, particularly those who’ve amassed a lot of equity, who want to stay in their home for a long time, and who could make good use of the extra cash to cover basic expenses or to meet other needs during retirement. If this sounds like it might be a good option for you, get yourself a free reverse mortgage guide so that you can learn how the program works in more detail, and make an informed decision about whether it’s the right move for you.