A home equity conversion mortgage, in the United States, is a kind of mortgage available to those 62 years and up. These mortgages are granted to elderly individuals who have a desire to utilize the equity within their houses to their advantage. They may take loans against the home equity as well as delay repayment, as long as they’re occupying their houses. It means that an individual may benefit from funds from the loan to deal with his financial requirements, without worrying about instant repayment.
Administered by HUD
A home equity conversion mortgage is provided through a plan administered by HUD (Housing & Urban Development). To secure these loans, an individual must locate an HUD-approved lender. The FHA will be charged with insuring the loan provided through the program.
As an individual wants a home equity conversion mortgage, she or he asks the lender to loan her/him funds based upon the quantity of ownership she/he has in the home. For instance, if an individual owes $100,000 for a house which is worth $120,000, he’s reported to have $20,000 in equity. An individual may borrow against the equity, virtually obtaining a loan which utilizes his ownership in his home as collateral.
Lump sum or installments
A person who secures home equity conversion mortgages may opt to obtain the loan funds as a lump sum or installments. For instance, the borrower might require a large sum of cash to fund a dream vacation or pay for medical care. In this case, he might choose a lump-sum payment. Another borrower might, for instance, experience problems making ends meet and needs more funds to meet his month-to-month costs. In the latter case, choosing consistent month-to-month payments might be more beneficial. The borrower might even choose to get the loan proceeds in the form of a credit line.
An individual who secures home equity conversion mortgages might feel almost like he’s receiving free money. However, the money has to be paid back. As the borrower moves out of his house or sells it, he’s expected to pay back the loan in full. For instance, if he sells his house, the sale’s proceeds usually would be used to pay off the loan.
For more information on our Home Equity Conversion Mortgage, contact Longbridge Financial today at 855-523-4326.
