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HECM to HECM Refinance

John Thomas October 23, 2021 Tags: , , ,
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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

About John Thomas

John Thomas and his team are long-time Delaware natives. They know the local real estate market as well as they know the loan products that help them serve it. Dedicated to helping first-time buyers; the John Thomas Team are experts on first-time buyer loan programs (FHA, VA, USDA) and conduct monthly first-time buyer seminars that have been attended by more than 3000 Delaware buyers.

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