FHA Loan Articles
News, updates, and explanations to keep you informed.
Can I Refinance an FHA HECM Loan?
Home Equity Conversion Mortgages or FHA HECM loans for short, are for borrowers aged 62 and older who want to take advantage of the equity built up in their homes.
HECM loans feature zero monthly mortgage payments--borrowers pay off a HECM loan in full if the property is sold or when borrower dies. ECM loans let the borrower use proceeds from the loan as a line of credit or receive monthly payments instead. Borrowers also have the option of combining the two options.
Home Equity Conversion Mortgage loans can also be refinanced under the right circumstances including when the FHA HECM borrower needs to add a spouse to the mortgage. Doing so offers a distinct advantage.
When one person only is named on a HECM loan, the mortgage would be due if the borrower dies. When a HECM mortgage loan has both occupants of the home named in the note, the second borrower is protected against the loan coming due-the terms of the reverse mortgage would be in effect as long as the surviving borrower continues to own the property.
FHA rules also let the homeowner take advantage of any additional equity built up in the home since the original reverse mortgage--refinancing is possible to add that equity to the loan amount.
In both cases, the borrower has the option to refinance into a standard FHA HECM loan or the more recent HECM Saver, which features savings on up-front mortgage insurance premiums.
The requirements for standard reverse mortgages and HECM Saver loans vary-check with your FHA regional loan center or loan officer to get details on which FHA reverse mortgage is best in your situation.
Standard occupancy rules apply to HECM loans the same as any other FHA home loan for single-family residences-the borrower(s) must certify that the home is the primary residence. Summer homes do not qualify for HECM type loan guarantees from the FHA because they cannot be considered a primary residence.
FHA NEWS and RELATED ARTICLES
When applying for an FHA home loan, some lenders may ask for tax paperwork as part of the application process. Some borrowers may wonder if this is legal, or an acceptable practice for home loans in general.
There are many questions about the official FHA loan rules for occupancy for single-family home loans. According to FHA rules, a borrower must occupy the home purchased with a single-family FHA loan as a personal residence as a condition of loan approval.
After the housing market crisis of the previous decade, many mortgage borrowers found themselves having trouble making their monthly payments. In some cases, borrowers just walked away from the mortgage completely and allowed the home to be foreclosed upo
The FHA has announced it would accept electronic signatures (also known as e-signatures) on several FHA home loan documents. The new policies are found in detail described in FHA Mortgagee Letter 14-03.
Some of your FHA loan closing costs may be financed, and some may--after being negotiated between buyer and seller--be paid by the seller within the boundaries of the FHA loan programís rules. The borrower can also pay some closing costs out of pocket.