Flexible Loan Options
For Your Retirement Needs
Home Equity Conversion Mortgage (H.E.C.M)
What is a HECM Reverse Mortgage?
HECM stands for Home Equity Conversion Mortgage and is a type of loan offered through private lenders, developed by the federal government to allow retirement aged Americans age in their home without the stress and worry about cost of living increasing. If qualified it allows you to borrow against the equity you’ve established in your home without repaying the loan for as long as you live in the home. Instead of making monthly payments, you can choose to receive monthly income…for as long as you live in the home!
HECM vs. Conventional Mortgages
A HECM Loan is unlike a traditional mortgage in that with a traditional mortgage you borrow a large amount of money up front and make monthly payments for 15 or 30 years. You generally need to be employed to pay back the loan. With a Reverse Mortgage there are no monthly mortgage payments, however you are now required to illustrate the ability to maintain property taxes, homeowners insurance and HOA dues if applicable which is part of the Financial Assessment Requirements.
- This loan is only available to individuals of retirement age so you must be at least 62 years or older.
- You must also own your home outright, or have a low enough remaining mortgage balance for the reverse mortgage to pay it off.
- Your home must be your primary residence and you cannot move for more than 12 consecutive months.
- You must complete a counseling session with a HUD-approved counseling agency – The U.S. Department of Housing and Urban
Development (HUD) provides a list of third party agencies for you to choose from. The purpose of this requirement is so you can be made
aware of all of your options, and evenly weigh the pros and cons of each.
Property Types that Qualify
- Your home must be a single family home or a 4-unit maximum multiple family home with one unit occupied by you.
- If your property is a multiple family home, then one of the units must be your primary residence.
- Your home can be a manufactured home as long as it meets FHA requirements.
- Your home can be a condominium project if it is HUD-approved.
- You must be financially able to pay your property taxes, insurance, and home maintenance and any applicable HOA fees.
- You cannot be delinquent on any federal debt.
HECM For Purchase
A Home Equity Conversion Mortgage (HECM) for Purchase is a reverse mortgage that allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage. There are flexible repayment features that the borrower can choose from. The borrower can choose to repay as much or as little as they like each month, or make no monthly principal and interest payments. The flexible repayment feature makes it easier for a buyer to afford the home they really want, preserve more savings and retirement assets, and improve cash flow. As with any mortgage, the borrower must keep current with property-related taxes, insurance and maintenance as part of their ongoing loan obligations. Repayment is generally required once they sell the home, pass away, move out or fail to meet their loan obligations.
Jumbo Reverse Mortgages – also known as Proprietary Reverse Mortgages – are loans designed and offered by financial institutions that enable owners of high value homes to access greater amounts of their home equity than is available from the government insured HECM Reverse Mortgages.