HECM Refinance For Seniors
Reverse Lenders In Denver
The CO Reverse Mortgage program is a special type of home loan that was created for seniors 62 years of age or older, who are beginning their retirement and in need of more cash.
Denver HECM Reverse Mortgage
A Home Equity Conversion Mortgage (HECM) is a type of reverse mortgage that is offered by the U.S. Department of Housing and Urban Development (HUD). An HECM is the only Reverse Mortgage that is federally insured by the government through the Federal Housing Administration (FHA).
Financial security is an important topic for senior citizens and their co-borrowers who have reached the age of 62, when a reverse mortgage becomes available. Upon reaching eligibility for retirement and social security payments, experiencing a cliff-like drop in income has led many homeowners to seek this special type of home loan.
This type of mortgage loan is designed to help seniors pay for the cost of living close to and after retirement.
To be considered eligible for a reverse mortgage, a homeowner must meet the following guidelines:
- The homeowner has reached the age of 62
- The home qualifies for a reverse mortgage
- The applicant resides in the home
HUD HECM Reverse Mortgages have many benefits because they are federally insured. You or your Heirs will never owe more than the value of the home if you sell the property to repay the loan, even if the property value declines.
The HUD HECM Reverse Mortgage has minimal requirements to qualify. You are not required to repay the loan as long as your property is your primary residence, is properly maintained and all assessments are kept current.
Denver Reverse Mortgage Benefits
A reverse mortgage is a loan available to seniors, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (e.g., into aged care).
In a conventional mortgage the homeowner makes a monthly amortized payment to the lender; after each payment the equity increases within his or her property, and typically after the end of the term (e.g., 30 years) the mortgage has been paid in full and the property is released from the lender.
In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property. If the owner receives monthly payments, or a bulk payment of the available equity percentage for their age, then the debt on the property increases each month.
A couple of the main eligibility requirements are as listed below:
- 62 years of age or older.
- Must own the property, or have paid down a considerable amount (low mortgage balance left to pay off).
- No delinquencies on mortgage payments or any debt owed to the federal government.
- Must be occupying the property as a primary residence.
- Homeowners must also participate in a consumer session (a counseling session that educates the homeowners on the pros and cons of the loan).
Eligible Denver property for reverse mortgages include the following:
Note that manufactured homes built before June, 1976 are not eligible for reverse mortgages. Additionally, a condo or townhouse won’t qualify unless the occupant owns the residence. Homes like vacation cottages and rental units aren’t eligible property types.
Expected Loan Amounts and Approval
Factors that will influence the size of the loan include:
- Age of the borrower
- Value of the property
If a reverse mortgage form is submitted by a couple, the age of the younger occupant will be used on the application.
As with any type of loan, borrowers should be prepared to submit to a credit check and should be able to demonstrate reasonably good credit. A perfect score isn’t required; however, there are some issues that may lead to disapproval for the loan, such as:
- Mortgage payments must be current
- Zero late mortgage payments in the past 2 years
- No bankruptcy applications in the last 2 years
- No foreclosure activity in the past 3 years
The Application Process
The U.S. Department of Housing and Urban Development (HUD), which supplies guidelines the HECM program, requires all borrowers to complete a counseling course on the process of obtaining and maintaining a reverse mortgage. A loan cannot be finalized until a borrower is able to present a certificate of completion for the counseling.
A borrower must also supply a variety of documents to complete the application process. Those documents include:
- HECM certificate of completion
- Valid photo ID
- Proof of homeowner’s insurance
- Social Security Card (or Medicare card)
- Most recent loan statement
Additionally, some Denver borrowers might need to present a death certificate if there is a deceased individual on the property deed as well as a marriage certificate if there is more than one living person listed. Some lenders may also require a property tax bill as well as a copy of the power of attorney for the property.
Jody Bruns / NMLS# 831033
Jody is a mortgage lender in Denver and is available at (720) 692-7245 if you have questions about home loans or mortgage programs in CO.
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