Personal financial planning is very important, because it helps people sustain their financial obligations both for the present and the future. While there is a lot of temptation to gratify present consumption, it is important to think and plan for future consumption. This is even more vital for young people who are still in their productive age. The decision to buy a home is one important financial decision that shows that one has a future consumption in mind. This is because buying a home means that one will not incur future rental expenses. For older people that own homes, they can apply for reverse mortgages which is a loan on the equity of the house they own. The reverse mortgage process ensures that elderly people who own a home, but are in need of cash can get a loan.
When you talk about reverse mortgage process, a lot of people might ask: ”What is a reverse mortgage?” Reverse mortgage is a loan advanced by a financial institution to a person that is over 62 years and is backed by the equity of the home they own. The unique thing about the reverse mortgage process is that, the elderly person does not need to pay any monthly repayment. Any elderly couple or a person who is considering reverse mortgage should seek professional counsel in order to determine elegibility, and other important financial information. More often than not, people who are considering reverse mortgage would have an institution approved by Home Equity conversion mortgage in mind.
When you are considering reverse mortgage loan by a HECM-approved institution, several question come into mind: What is a Reverse HECM Reverse Mortgage? What is a Reverse Home Equity Conversion Mortgage Reverse Mortgage? This is a mortgage loan that is ensured and guaranteed by Federal Housing Administration, a subsidiary of the U.S. Department of Housing and Urban Development. There are several conditions that have to be fulfilled before one qualifies for a HECM reverse mortgage loan. These conditions include:
- You must be living in the subject home as a primary place of residence
- The owner of the home or spouse must be over 62 years
- The home must meet HUD property standards
- You need counseling from an agency approved by the US Department of Housing and Urban Development
- You must be in good credit standing
- The home must be located in the US
It is highly-advised that you get some guidance when going about obtaining reverse mortgage loans. This is one of the recommendations from HECM. Once you are sure that the reverse mortgage loan is the way to go and you are convinced that the money that you could obtain from this will be enough to finance your needs after the upfront costs, it is then an appropriate time to approach a financial institution to get the loan. While there are some procedures involved in the initial stage of the process, the financial institution should guide you through every step of the way.