Getting an HECM loan can be the best way to acquire the financial means you need to cover a large expense or cost. Read the following questions and answers to help you find the best HECM for you.
1. What do you want to do with the funds?
This will determine the kind of reverse mortgage to go for. If you only need to pay for home repairs, you might entertain options other than an HECM loan. However, if you need to pay off your property taxes or huge medical and treatment costs, an HECM reverse mortgage might be a good idea.
2. Do you live in a property with a market value that’s higher than the average?
If that’s a yes, then an HECM loan is an option. Be sure to ask an HECM counselor or lender for more information. That way, you know what to compare: from charges and costs to interest rates and the amount of the money you can borrow.
3. What are the fees and costs involved?
HECM loans often have closing, servicing, and origination fees so keep that in mind, as per the Federal Trade Commission’s recommendations. You’ll also need to compare interest rates. Shop around to make sure you aren’t getting the bad end of a deal. Some companies might overcharge, but if you’ve shopped around, you won’t get taken in that easily, allowing you to choose the best mortgage loan for you.
4. What about the loan repayment?
Consult a counselor from any approved housing counseling agencies or a reputable lender to explain how the Total Annual Loan Cost or TALC rates work. By showing you a projected value of your annual average cost of a reverse mortgage, complete with itemized costs, you’ll have a better idea of what you’re getting into. In an HECM loan, repayment can only start after certain conditions are met, so ask an HECM expert for guidance and assistance.