What Is a “HECM” Reverse Mortgage Loan?
Unlock your home’s equity and open the door to possibilities in retirement.
Home Equity Conversion Mortgages (HECMs) are by far and away the most common type of reverse mortgage loan. HECMs are the only type of reverse mortgages loan insured by the Federal Housing Administration (FHA), which offers a lot of benefits you’ll see below, and you can only get one through an FHA-approved lender like Fairway.
Key “HECM” Benefits
Increased Cash Flow
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You can access cash from a portion of your home equity without incurring income tax* (generally, it won’t affect your Social Security and Basic Medicare benefits). You can use the funds how you want.
Flexible Repayments
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You have the option to repay as much or as little of the loan balance each month as you would like, or you can make no monthly mortgages payments at all. Of course, you must still maintain the home and pay homeowners insurance and property taxes, just like a traditional mortgage.
The FHA guarantees no repayment of the loan is required until the last borrower moves out or passes away. When you move out of your home, you or your estate has up to 12 months to repay the loan balance, which is typically achieved by selling the home.
Non-Recourse Feature
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The FHA guarantees that if the balance on the loan exceeds the home value at the time the home is sold, neither you nor your heirs will be responsible for paying the deficit (it’s covered by the FHA Mutual Mortgage Insurance Fund, which is funded by borrower premiums). If there are excess proceeds from the sale of your home, you (or your heirs) would receive them.
- You remain on the title and you own the home.
- You can sell your home at any time.
- Line of credit growth feature.
With a HECM reverse mortgage line of credit, the unused portion of the line of credit will grow each month at the same rate as the loan balance. In other words, you will have access to even more funds over time, regardless of home value.
Learn the Basics About HECMS for Homeowners in Less Than 3 Minutes!
Here Are Popular Uses for Reverse Mortgage Loans:
Eliminate Monthly Mortgage Payments
(Borrower must still pay property charges like taxes, insurance and upkeep)
Supplement Cash Flow
Bridge the Medicare Gap From Age 62 to 65
Use as a Standby Line of Credit
Fund Major Expenses, Like In-Home Care or Home Renovations
General Eligibility
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The borrower(s) must:
- Be 62 years or older
- Live in the home as his or her primary residence and either own the home outright or have significant equity in the home
- Meet minimum credit and property requirements
- Must receive reverse mortgage counseling from a HUD-approved counseling agency
- Must not be delinquent on any federal debts
Loan Proceeds Payout Options
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- A lump sum payout
- Fixed monthly advancesÂ
- Tenure (life of the loan)
- Term (set period of time)
- A line of credit
- A combination of monthly payments and a line of credit
Eligible Properties
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- Single family residence
- 2- to 4-unit properties
- Manufactured homes
- Modular homes
- Planned unit developments
- Townhomes
- FHA-approved condominiums
Get a No-Obligation Reverse Mortgage Evaluation and Quote Today!
*This does not constitute tax or financial advice. Consult a tax and/or financial advisor regarding your specific situation.