Help on reverse mortgage HECM calculations?

Posted on Aug 4, 2012 in FHA Information

what is an fha mortgage
by SS&SS

Question by C o n f u c i a n: How does a refinancing loan work on an FHA mortgage?
I have an FHA loan for $ 25, viagra sale illness 000……House is worth much more, link hospital especially after the repairs we did. House sold at least 3 different times between 1995 and 2006 for approximately $ 100, ambulance 000.

I am guessing it is at least appraised for $ 65,000 right now….

I still have 29 years left on the mortgage. How does refinancing work (what kind of loan would I get in $ terms), and what do I need to get approved?

Best answer:

Answer by loanmasterone
The equity you might have accumulated in the property would depend on if you are able to apply for and be approved for a refinance on your home.

Primarily you would go through the same process as you did when you first purchased your home. You would have to find a FHA mortgage lender and apply for a refinance of your property through.

You might inquire of this FHA mortgage lender about the FHA streamline refinance program. You would still get your refinance, however, there is less paperwork and perhaps an appraisal report might not be required.

Normally on a refinance you would able to refinance for a maximum of 80% of the appraised value of the property. If you think the property would be valued at $ 65,000 then 80% would be approximately $ 52,000. After paying off your current mortgage you would see approximately $ 27,000 in your hand minus points and fees that would be charged for the mortgage loan refinance.

There might be a provision that would not allow you to cash out for more than you paid for the house a year ago. You might be able to pay off any consumer or credit card through this refinance or you might be able to purchase a large ticket item for you house.

Ask the mortgage loan officer for cash out requirements that might apply for your refinance and see if there are any restrictions.

I hope this has been of some benefit to you, good luck.


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Question by Lilo Silver: Does FHA require the seller to make repairs from the appraisal?
I just had an FHA appraisal that noted two items that needed to be remedied.
1. Install a cook top
2. Fix dented siding (there may have been some dry rot)

I am under the impression that the seller is required to make these repairs at their expense. In other words, medical the seller is not allowed to accept an FHA loan without these type of items being fixed. Am I misinformed?

Best answer:

Answer by Mike
Not exactly, The seller doesnt have to make any repairs if he doesnt want to. Its not that the seller cannot except your FHA loan, the FHA loan will not let you buy that house if the repairs are not made.

Know better? Leave your own answer in the comments!

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Question by : Help on reverse mortgage HECM calculations?
I used the calculator from the HUD FHA or something:
The inputs are:
ZIP: 02452
Born: 04/11/1950
No wife
Home worth: 500, website like this 000
Mortgage and liens: 100, remedy 000
Monthly payments: 10, treatment 000
Other upfront: 0
Estimate any necessary: 0
Your desired line of credit: 50,000
Click calculate or something and it will take you to the next page. Please just look at the 1st column.
So lender margin is an assumption right?
How did initial total loan rate got bumped from 3.989% to 4.063%??
Where did the Lifetime cap on loan rate of 12.739% come from?
Where did The HECM Expected Rate of 4.580% come from?
Where did the Loan principal limit of $ 309,500 come from?
Where did the Monthly Advance come of $ 781 come from?
calculation guidelines pleasee
Thank you very much!!!!!

Best answer:

Answer by MRA
So lender margin is an assumption right? Yes, it can vary by lender, as can the Fixed rates.

How did initial total loan rate got bumped from 3.989% to 4.063%? These are two different rates. 4.063% is the GROWTH rate of your credit line (whatever funds you do not withdraw and remain in your account for future withdrawals will grow over time – your LOC will increase over time so you can borrow more without having to refinance). 3.989% is the loan interest rate that will accrue on only what you have already withdrawn.

Where did the Lifetime cap on loan rate of 12.739% come from? on the adjustable program, the lifetime cap is 10% above whatever your loan interest rate is (what the bank charges you: 2.739% + 10%). It is not based on the total loan rate which includes the extra 1.25% that goes to FHA (the government) and not the bank.

Where did The HECM Expected Rate of 4.580% come from? That rate is used one time only at time of closing. Once the loan closes and funds and you get your money, you will never see that rate again. It is the rate used to decide how much money you are eligible for. It is NOT the interest that is charged on your loan (2.739% + 1.25%)

Where did the Loan principal limit of $ 309,500 come from? That is an internal calculator based on your age, appraised value and expected rate (4.58%). The older you are AND the lower the expected rate (up to the floor), the more money you get. All the lenders use the same calculator. What changes among lenders are the margins and closing costs. Some may waive the fees and closing costs for higher margins/interest rates, but you may get less money.

Where did the Monthly Advance come of $ 781 come from? You have 4 choices of how you can get your money: Line of Credit (LOC) to tap into whenever you want; monthly draws for as long as you live there (Tenure Program – amount is whatever the calculation is, for life, at home); monthly draws for a fixed time period (Term Program – amount is whatever you decide, for as long as it lasts); or a combination of the above (Modified). This scenario is based on the Modified Tenure Program: a combination of monthly draws of $ 779 for as long as you live in the home, with a LOC of $ 50,000. It is an internal calculation based on your eligible funds of $ 143,399 and your life expectancy, with your request for $ 50k in a LOC. Once the loan closes, no matter what happens to the economy or your home value, that monthly draw is set in stone for life (as long as you live there) and no one can take away your LOC. If you adjust the LOC up or down in the calculator, the monthly draw will do likewise. For example, if you tell the calculator you only want a $ 25,000 LOC, your monthly draw will go up to $ 916 for as long as you live in the home (even if you surpass all life expectancies). If you want to keep the LOC at $ 50k, but feel you need more or less than the $ 779, then talk to your broker and they can adjust the figure to what you want, but then you go into the Modified Term Program. They will tell you how long your funds will last based on the amount of monthly draw you chose.

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