Reverse Mortgage – HECM Loans

Reverse mortgages are becoming popular in America. Reverse mortgages are a special type of home loan that lets a home owner convert the equity in his/her home into cash. They can give older Americans greater financial security to supplement social security, meet unexpected medical expenses, make home improvements, and more.

With an interest rate established at the loan closing, and fixed for the life of the loan, this HECM provides homeowners with peace of mind. You’ll always know exactly how much interest is accruing on your loan. However, with a HECM Fixed Rate, you are required to take all of your money at closing in one lump sum. This may be a desirable choice, if you’re using your HECM to pay off a larger existing mortgage or cover other immediate needs.

The interest rate on this HECM fluctuates on a monthly basis, but it also offers more options for homeowners. You can choose a lump sum draw, line of credit, monthly payment, or a combination of these options. For example, you might choose to take some of your cash up front and put the rest in a line of credit, so it’s available when, and if, you need it. You only accrue interest on the money that you actually take

This HECM helps you purchase a new home that will better fit your future needs by taking out a loan on that home. Both the purchase and the HECM are handled in one transaction.

Eligibility Requirements

To be eligible for HECM, you’ll need to meet requirements set by the federal government:

  1. All borrowers must be age 62 or older (this applies to all co-owners listed on the home’s title).
  2. The home must be your principal residence. And it must meet standards set by the U.S. Department of Housing and Urban Development (HUD) on property type and condition. You can, however, user your HECM to pay for any required repairs in order to meet these standards.
  3. Eligible property types include single-family homes, 2-4 unit properties, manufactured homes, condominiums and townhouses.

A reverse mortgage loan can help:

  • Supplement retirement income
  • Pay off an existing mortgage or other existing debt
  • Pay for medical care, prescription drugs and in-home care
  • Cover large or unexpected expenses
  • Make home improvements and repairs
  • Stretch retirement savings

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