What The HECM?
Home Equity Conversion Mortgage (HECM) Loans have been around since 1989, formally known as reverse mortgage. There have been some major changes over the years and hence many misconceptions about how the program works. It is not for everyone and there are specific guidelines that must be followed in order to qualify for this type of loan.
A Home Equity Conversion Mortgage (HECM) is the only reverse mortgage insured by the U.S. Federal Government. The HECM is FHA’s reverse mortgage program that enables qualifying seniors to withdraw a portion of their primary home’s equity.
With a traditional reverse mortgage loan, borrowers can access their home equity without having to pay principal and interest.* It’s called a “reverse mortgage” because, unlike a traditional loan where the borrower makes payments to the lender, the lender makes payments to the borrower. The loan is repaid when the last borrower or eligible non-borrowing spouse passes away or leaves the house.
Safeguards in Place
The safeguards in place are designed to assist consumers in making the best decision for their household, without the high pressure of sales people.
Some of the safeguards are:
- You must complete reverse mortgage counseling wit an independent counseling agency.
- Yo must undergo a financial assessment to ensure you are able to meet th financial obligations of the loan, which includes the ability to pay you property taxes and homeowners insurance.
- I your spouse is younger than 62, they can qualify as an eligibl non-borrowing spouse and remain in the home even if you leave or pass away, so long as they continue to meet all loan obligations.
Who Qualifies?
- You must be at least 62 years of age
- You must own your home
- The home must be your primary residence
- There is NO minimum credit score required
- Must have 50% equity in your home
- Must be able to continue to pay the property taxes and homeowners insurance premiums.
- Must continue to keep your home in good and safe condition according to FHA guidelines.
- Please give us a call to discuss more details based on your unique circumstances.
Additional Information
- The borrower remains the owner of the home and retains title.*
- The amount you can borrow depends on your age, property value, and interest rate. The older you are, the more equity you’ll have access to.
- The borrower must continue to pay property taxes and homeowner’s insurance, and must keep the house in good repair.
- As a non-recourse loan, the borrower will never owe more than the house i worth. If the loan balance exceeds the home’s value, the Federal Housin Administration will cover the difference.
- There ar different types of reverse mortgages and the funds can be disbursed in number of ways.