Home Equity Conversion Mortgages

A Home Equity Conversion Mortgage (HECM) is a type of home equity loan that allows you to convert some of the existing equity in your home into cash while you retain ownership of the property. Equity is the current cash value of a home minus the current loan balance.

A HECM is a type of mortgage that can be referred to as a reverse mortgage. HECMs work much like a traditional mortgage, except it can go in reverse. Instead of the homeowner being required to pay the lender each month, the lender can use the equity to pay the mortgage or even pay the homeowner. As long as the homeowner continues to live in the home, no repayment of principal, interest, or servicing fees are required. The funds received from a reverse mortgage may be used for anything, including housing expenses, taxes, insurance, fuel or maintenance costs.

To qualify for a HECM mortgage, one of the borrowers must be over the age of 62. Depending on your financial needs,  you have several options to taylor the perfect program to meet your retirement goals. The key to this program is setting it up properly, once an application has been taken and an understanding of your desires, we recommend meeting with your financial planner to for your final fitting. You may choose to receive the reverse mortgage funds in a lump sum, monthly advances, as a line-of-credit, or a combination of the three. 

Because the borrower retains ownership of the home with a HECM, the borrower also continues to be responsible for taxes, repairs and maintenance.

Depending on the plan selected, a reverse mortgage is due with interest either when the homeowners permanently move, sells the home, or all parties pass. Upon the demise of all parties, the lender does not take ownership of the home. Instead, the heirs have the same options as a typical mortgage. Please call for further details, FHA has a few bonuses to protect or even increase the equity for your heirs.