What is it?
In the simplest terms, the Home Equity Conversion Mortgage (HECM) is an FHA-insured loan that converts a portion of your home’s equity into cash. There is no restriction on how HECM proceeds can be used.
Loan repayment is delayed until the borrower(s) sell the home, no longer live in the home as the primary residence, or default under terms of the loan, including not paying home taxes and insurance, or HOA fees, if applicable.
Who is it for?
This is an FHA insured reverse mortgage program for homeowners who meet the the basic requirements:
- At least one homeowner is age 62+
- Have equity in the home (refinance only)
- Own home as primary residence
- Keep property taxes and insurance current
- Maintain home in good repair
- Show the HECM will improve their financial situation
How can I use it?
You can use the HECM program to refinance your home and use a portion of your equity to:
- Eliminate your monthly mortgage principal and interest payment
- Create a line of credit
- And more
Or you can use the HECM program to purchase a home better suited to your lifestyle.
Top 4 Myths You Might Believe
You remain in title to your home and may live in your home for as long as you wish. Loan terms require that you keep property taxes, insurance and HOA fees, if applicable, current, retain home as your primary residence, and keep the home in good repair. However, it is still your home.
The HECM is an FHA insured “Non- Recourse Loan,” which cannot be passed on to your heirs.
The HECM loan can also be used as a strategic retirement tool. Many people use a HECM to protect retirement funds during market downturns.
If you qualify, a HECM will pay off your existing mortgage and give you additional money. This will eliminate your current monthly mortgage payment, freeing up more money for you.
Common Uses for a HECM
The Loan Process
(Step by step process)
History of the HECM program
(Reverse Mortgage to HECM)