There are often some misconceptions regarding HECM loans and other types of mortgages. By finding out the truth, you put yourself in a great place to benefit from some helpful options. Individuals have heard different myths about HECMs, and the truth will help you determine whether or not to pursue this avenue with your home.
One of the myths commonly associated with HECM loans is that the lender becomes the owner of the home’s title. This is not true. Instead, the homeowner keeps the title and remains as the owner. An HECM is simply a lien that goes against the property owned. This is often a relief for homeowners who want to stay in control of their assets but could use some spending funds.
Another myth about an HECM is that you can be evicted by the lender. The truth is you are able to live in the home for the duration of time you need to. The loan does not need to be paid back until you move out of the home and no longer live there on a consistent basis. You will never be forced to leave.
Your heirs receiving a huge bill when you pass away or move into an assisted living center is another myth. As a non-recourse loan, you won’t ever owe a higher amount than the property appraises for. This also means that your heirs won’t owe a higher amount. At loan maturity, whatever the appraised value is will remain the loan amount that needs to be paid off. It will not rise after the initial mark.
Finally, you may have heard that your current mortgage might prevent you from receiving HECM loans. This is only true if you don’t plan to pay off the remaining balance of your current mortgage. If the current balance is low enough and you can use the proceeds of the HECM to pay it off, then it shouldn’t be a problem.
Speaking with a lender is a great way to learn more about HECM loans. If this is something you are interested in, contact your lender today. For more information about an HECM Loan, do not hesitate to contact Longbridge Financial, LLC, or click here for more details.
