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Home Equity Conversion Mortgages
An FHA-Insured Reverse Mortgage for Homeowners 62 and Older
A Home Equity Conversion Mortgage (HECM) allows eligible homeowners to access a portion of their home equity while continuing to own and live in their home. Unlike a traditional mortgage, a HECM does not require monthly principal and interest payments as long as the borrower meets the loan obligations.
Benefits:
How a HECM May Help
A Home Equity Conversion Mortgage (HECM) loan may provide greater flexibility in how you use your housing wealth throughout retirement.*
* This advertisement does not constitute tax advice. Please consult a tax advisor regarding your specific situation.
1. Reduce Monthly Housing Expenses
Pay off an existing mortgage and eliminate the required monthly principal and interest payment.
2. Create Additional Cash-Flow Flexibility
Access available home equity to supplement other retirement income and resources.
3. Establish a Financial Reserve
A HECM line of credit can provide access to available funds for future or unexpected needs.
4. Make Home Improvements
Use available proceeds for repairs, accessibility improvements, or other changes that may help you remain comfortably in your home.
How much funds can you access?
The amount of home equity available through a HECM depends on several factors, including your age, home value, current interest rates, existing mortgage balance, and applicable FHA lending limits.
If you have an existing mortgage, it generally must be paid off as part of the HECM transaction. Any remaining available proceeds may then be accessed according to the terms of your loan.
General Requirements:
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You must be 62 years old or older
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You must meet minimal credit and property requirements
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You must receive reverse mortgage counseling from a HUD approved counseling agency
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You must not be delinquent on any federal debt
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Home must be a primary residence
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Property must be a single-family home, a 2- to 4-unit dwelling, or FHA-approved condo
How can funds be received?
Line of Credit: Access available funds when needed.
Monthly Advances: Receive available proceeds through scheduled monthly advances.
Lump Sum: Receive eligible proceeds at closing, subject to applicable limits.
Combination: Combine available options to meet different needs.
Your responsibilities as a homeowner:
With a Home Equity Conversion Mortgage (HECM) loan, you continue to own your home. You are responsible for paying property taxes and homeowners insurance, maintaining the property, and meeting the loan's occupancy requirements.
The loan generally becomes due when the last borrower permanently leaves the home, sells the property, or no longer meets the terms of the loan.
Is a HECM Right for You?
A HECM can provide valuable flexibility, but it isn't the right solution for every homeowner. A Housing Wealth Review can help you look at your home, existing mortgage, available equity, and retirement goals to determine whether a HECM—or another strategy—is worth considering.