HECM to HECM Refinance
What is a HECM to HECM Refinance Loan?
A HECM to HECM refinance is refinancing an existing Reverse Mortgage with a new Reverse Mortgage. A HECM Reverse mortgage loan is an abbreviation for a Home Equity Conversion Mortgage (HECM). The process works for someone who currently has an existing HECM that wants to refinance into a new HECM. If you would like to apply for a HECM Reverse Mortgage Refinance please call the John Thomas Team at 302-703-0727 or APPLY ONLINE
What is a HECM?
HECM or Home Equity Conversion Mortgage is FHA’s reverse mortgage product specifically for senior homeowners 62 years old and older. With a Reverse Mortgage Loan the equity in the home makes the mortgage payments and borrower is only responsible for typical expenses such as taxes, insurance and HOA fees. Having a Reverse mortgage loan has many of the same benefits of owning a home free and clear without the monthly mortgage payments. The HECM has the following benefits:
- Allows seniors to access equity in their home
- Is a non-recourse mortgage loan
- HECM has no fixed maturity date
- Borrower is not required to make monthly principle and interest payments but interest does accrue to the balance of the loan
- Real Estate taxes, hazarrd and flood insurance premiums and other property related expenses remain the borrower’s responsiblity
- Borrower Retains ownership of the home
- HECM is a cash flow qualification and is not Fair Isaac Corporation (FICO) score or ratio driven
- Lender is responsible for disbursing loan proceeds according to the borrower’s payment plan
- Lender is responsible to determine if the HECM is a sustainable solution for the borrower
There are three types of HECM Reverse Mortgage Transactions:
- Traditional – Borrower(s) own the subject property and will obtain a HECM refinance for the first time
- Refinance – HECM to HECM Refinance of the subject property
- Purchase – HECM loan proceeds are used to purchase the subject as a new Principe residence.
We recommend you familiarize yourself with the HECM Reverse Mortgage Loan Process
What are the Benefits of a HECM to HECM Refinance?
There are several reasons that could make it make sense to review your current HECM reverse mortgage for a HECM to HECM Refinance:
- Stabilization or increase of housing prices in your area
- Introduction of annual, adjustable-rate mortgages with lower rate cap
- New Protections for non-borrowering spouses
The most commons reasons to consider a HECM Refinance Loan are as follows:
- Access additional equity gained through appreciation to consolidate debts, establish a line of credit, or pull out cash
- Add additional borrowers to the reverse mortgage loan
- Make changes to the interest rate such as going from adjustable to a fixed rate or locking in a lower rate
- Retain All benefits of previous Reverse Mortgage Loan
- Establish monthly payments form the bank to supplement a fixed income
- Reduced Income qualifying requirements
- No mortgage payments as long as the home owners lives in the home
Who is Eligible for a HECM Mortgage Loan?
HECM Reverse Mortgage Loans are reserved for families where at least one borrower is 62 years of age or older. There is a minimum equity requirement that must be in the home which is determined by the age of the borrowers. Your Home must be considered an eligible property which is outlined below:
- 1-to-4 Unit properties (Borrower must occupy one of the units)
- Manufactured homes built after June 16, 1976 and must own the land
- FHA approved condominium projects
- New Construction properties with Certificate of Occupancy
- Must Meet FHA minimum property requirements
- Solar is acceptable
- Borrower must maintain Hazard and Floor Insurance is applicable
- Appraisal is required for all HECM Transaction types.
How Do I Apply for HECM to HECM Refinance?
If you currently have HECM Reverse mortgage loan and want to get more information on refinancing into a new HECM loan or would like to apply now, please call the John Thomas Team of Primary Residential Mortgage at 302-703-0727 or APPLY ONLINE