If you are 62 years old and above, have excellent credit, and already own your home outright or have very little on your mortgage balance left, you may qualify for HECM.
What is HECM?
HECM or the Home Equity Conversion Mortgage is a government-insured reverse mortgage loan program. It is designed to help retirees tap into their home’s equity and take it out as cash. The program was established in 1961 and has since made significant contributions to the lives of thousands of worthy American seniors.
So how does one qualify for HECM and what are the other requirements that will determine the eligibility of the individual and the property? Let’s take a closer look at them.
- Since the program is intended for seniors, the qualifying individual must be at the retirement age of 62 years or older.
- You must own the home or have a low enough remaining balance on its mortgage.
- The property must be your primary residence. When you take out a reverse mortgage, you cannot live elsewhere for 12 consecutive months, as a condition.
- Must accomplish a counseling session with an HUD-approved counseling agency. There is a list of these third-party agencies that the HUD provides for you to choose from. The counseling will help you fully understand the terms of reverse mortgage, how it will impact you and your future finances, and all your options as an applicant.
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- The type of your property must either be a) a single-family home or b) a multifamily home with four units in maximum where one of which is occupied by you.
- If manufactured, it must meet FHA requirements.
- If a condominium, must be HUD-approved.
Take note that vacation or secondary homes will not be qualified for HECM. The same is true for income-producing properties.
- You must be able to pay property taxes, home maintenance fees, insurance, and other Home Owner’s Association fees. Thus, your financial health will be assessed and verified through income and asset checks, credit history check, and other financial assessments that will help determine your ability to still carry these financial burden.
- You must have a good history of financial non-delinquency. This goes for being on time on your payments that might include state taxes, insurance, etc.
Talk to a professional if you want to learn more about these qualifications or if you need an expert to guide you through the whole process of getting an HECM.