HECM-Home Equity Conversion Mortgage
An Overview of the Federally Insured Home Equity Conversion Mortgage or HECM
First thing first, 98% of all reverse mortgages today are the Federally Insured Home Equity Conversion Mortgage or HECM line of credit. This is HUD and FHA’s new name for their reverse mortgage. Basically, they upgraded or enhanced the “old” reverse mortgage. So, it’s important to realize that when commercials and marketing material advertise reverse mortgages, they’re talking about the Federally Insured HECM.
A HECM can be an amazing retirement tool. The HECM allows you to use a portion of your home’s equity as a line of credit with no required monthly payments. Monthly payments are completely flexible. You can pay Interest-Only or both Principal and Interest or you can pay nothing! That’s correct, you can pay nothing whenever you need to.
HECM Credit Lines provide financial support for today’s retirees. They can use the funds from the program to pay consumer debts and taxes, home repairs or renovations, medical bills, and everyday expenses as well as to just pay off their current mortgage which increases their cash flow.
- Flexible Payments: You can pay Interest Only, Principal Interest or pay Nothing!
- It’s completely your option every month.
- Open a “Growing” Credit Line that has a guaranteed LIMIT increase every year for life.
- Replace cash reserves
- Supplement your income with continuous monthly withdrawals, just like a annuity or pension.
- Protection for the remaining spouse from the loss of income.
- Pay off outstanding consumer debts like high interest credit cards.
- Complete home repairs or improvements without worrying about taking on additional debt.
- Help pay high property taxes
- Protect your retirement investments from market swings or declines.
- Support “aging in place” expenses for home modifications.
- Pay for medical or dental emergencies or for long term care.
- Help your children or grandchildren with some advanced inheritance money.
- “Right-Size” to a home that better fits your needs or lifestyle with the New HECM for Purchase.
- Or any other purpose!