Do you know that 14.5% of the US population is 65 years old or above? This number of aged population is increasing rapidly and will continue to increase. The truth behind this is that improved health care facilities are pushing life expectancy upwards. These old people, after retirement, are dependent upon their pensions or on social security benefits. Another way through which they can receive an additional cash flow is HECM for purchase reverse mortgage. Here we have listed two things that you should know about HECM for purchase reverse mortgage.
The Maximum Amount That You Can Borrow and Owe
Most people are not aware of the fact that there is a limit/cap on the equity that can be accessed through a reverse mortgage. The FHA has set this amount to $625,000. Note that if you wish to take the entire amount as one lump sum, then the total payment will be less than this amount. This is because the future payments that you may have received otherwise will be discounted to determine the present value.
Apart from this, there is also a cap on the amount that the borrower will owe. The maximum amount that the borrower can owe is the value of their home. This means that after the death of the borrower, the lender can only recover the amount lent by selling the home of the borrower, which is also the collateral of the lender.
Fixed or Floating?
The amount of money that you receive monthly after purchasing HECM for purchase reverse mortgage can either be set at fixed or floating at the time of purchasing. The fixed part is easy to understand, but if you chose to receive a floating rate, then your rate will be revalued every month. This rate is derived from LIBOR and other macro economic factors.
Longbridge Financial is a lender that deals in HECM for purchase one of the reverse mortgage experts that is approved by the Federal Housing Administration (FHA). It operates in 46 states and is committed to providing financial peace of mind to the elder generation.
