Reverse Mortgage HECM
A reverse mortgage is a loan available to seniors over the age of 62 which allows them to convert equity in their home into cash. These loans were created to give seniors access to cash for expenses such as home improvements, unexpected medical costs, and in-home care by utilizing the accumulated equity in their homes.
This type of loan is called a reverse mortgage HECM because instead of the borrower making monthly payments to their lender as they would with a traditional mortgage, the lender makes payments to the borrower. Unlike a traditional home equity loan or second mortgage, a reverse mortgage HECM does not have to be repaid until the borrower no longer occupies the home as their primary residence or fails to meet the other obligations of the loan.
The most common reverse mortgage is the Home Equity Conversion Mortgage (HECM) which is insured by the FHA. To learn more about them, watch our video HERE. An alternative option are proprietary Reverse Mortgages which are not backed by the federal government and are not considered HECM loans because of the proprietary nature. For more info about our proprietary programs CLICK HERE
HECM vs. a traditional mortgage
With a traditional mortgage or home equity loan, you borrow a large amount of money and are obligated to make monthly payments. You must also have the income and credit to qualify. With a reverse mortgage, there are minimal qualifications and no monthly mortgage payments to make. As a consumer protection, borrowers have to prove they can maintain their property taxes and home owners insurance. With a reverse mortgage, there is also a line of credit feature that grows over time and cannot be frozen; giving you access to your equity tax free, whenever you may need it.
A HECM loan (reverse mortgage) helps you convert home equity into flexible, tax-free income you can use however you want and:
- Continue to live in and own the home without having to make monthly mortgage payments
- Receive funds tax free in a lump sum, monthly payments, a line of credit or a combination; giving you the ability to adjust your payment options to meet your changing needs
- Repay the loan at any time without penalty
- HECM loans are not considered income, are not taxed, and will not affect Social Security or Medicare benefits. Consult your local program offices to determine how, or if, monthly HECM loan payments might affect your eligibility for other programs.
Would you like more cash in your pocket? Wondering how much you may qualify for? Call us today at 503-427-1667 or fill out the form on this page for more information.
To learn more check out the HUD website