FAQs
Forward Mortgage FAQs
What is the difference between a Forward Mortgage vs. a Reverse Mortgage?
A Forward mortgage requires some form of monthly amortized principal and interest payment during the term of the loan, to reduce the balance over time. The loan balance is reduced by each payment made until the loan has been paid in full.
Example: 30- year fixed loan. If this loan is paid monthly to full term, the balance of the loan will be paid in full, at the end of 30 years.
A Reverse Mortgage accrues interest each month and is not paid back until the loan is terminated. This can be from the death of all borrowers, including the non-borrowing spouse or by the sale of the home, by choice of the borrowers. This loan is age restricted. Minimum age is 55 but not in all states. Nationwide age requirement for a Reverse HECM loan, is 62.
What is the difference between a Forward Mortgage vs. a Reverse Mortgage?
A Forward mortgage requires some form of monthly amortized principal and interest payment during the term of the loan, to reduce the balance over time. The loan balance is reduced by each payment made until the loan has been paid in full.
Example: 30- year fixed loan. If this loan is paid monthly to full term, the balance of the loan will be paid in full, at the end of 30 years.
A Reverse Mortgage accrues interest each month and is not paid back until the loan is terminated. This can be from the death of all borrowers, including the non-borrowing spouse or by the sale of the home, by choice of the borrowers. This loan is age restricted. Minimum age is 55 but not in all states. Nationwide age requirement for a Reverse HECM loan, is 62.
What is the most common Forward loan program?
A 30- year fixed mortgage. This has a fixed interest rate and a fixed monthly payment,
comprised of principal and interest.
What is an ARM Mortgage?
An ARM is an “Adjustable-Rate Mortgage.” An ARM loan has a minimum loan term, for example, 5 years. The loan has a “fixed interest rate feature” for that first 5- year term and then converts to an adjustable interest rate. The interest rate and monthly payment adjusts periodically based upon the terms and loan.
What are some of the other types of mortgage loan programs?
VA: This Government loan is for Veterans or qualified veteran spouses, who have received an honorable service discharge and a VA Certificate of Eligibility.
FHA: This Government loan program is offered to any borrower who meets the Federal Housing Administration/HUD: US Housing and Urban Development borrower eligibility. It offers a more flexible borrowing option for borrowers with lower down payments, higher debt to income ratios and/ or credit challenges.
USDA: USDA Rural Development Guaranteed Housing Loan Program, is a mortgage loan offered to rural property owners by the United States Department of Agriculture, Rural Development. This Government loan program serves borrowers interested in properties in the rural areas.
Is a Forward mortgage a Recourse Loan?
Yes, it is. The borrower(s) are personally liable for the repayment of the loan.
Karen Keyser
Sr. Mortgage Advisor / Broker Associate
Tel: (208) 908-0190
DRE # 1348153 NMLS # 238676
Capital Loan Associates
Tel: (858) 376-0404