Is the time for your retirement drawing nearer? If that’s the case, then most probably you are looking to go for an HECM loan against your house. This will provide you with fixed monthly payments so that you can make your ends meet without fretting over your financial situation. Before you do that, we would like to educate you on some technical terms used so that you can make sense out of what the reverse mortgage lenders are talking about.
Annuity: This term is used when the lender will pay you a fixed amount of money every month for the rest of your life.
Origination Fee: The fee charged by the lender to the borrower for the processing of the HECM loan application. The maximum origination fee that a lender could charge is $6000.
LIBOR: It is an acronym for London Interbank Offered Rate. This is the benchmark for determining the monthly payments if the borrower has chosen HECM adjustable rate loans.
Home Equity: This is the total worth of your home as determined by the surveyor minus all the debt on your home remaining to be repaid.
Right of Recession: This is the right that the homeowner has to legally back off from the HECM loan and cancel the HECM contract. The borrower has generally three days to use their right of recession.
Closing: When you have agreed to the terms, conditions and covenants of the lender and have signed the HECM loan document, this is considered as closing.
Longbridge financial is a lending company that specializes in HECM loans and is approved by the Federal Housing Administration (FHA).
