Frequently Asked Questions

The Home Equity Conversion Mortgage, or HECM (also known as the FHA Reverse Mortgage) was created in 1989 to help older homeowners meet the financial demands of retirement and aging securely in their home. It is a mortgage loan based on your home's value, the youngest borrower's age and the current interest rates. What makes the HECM so unique is that it requires no monthly mortgage payments, giving you access to liquid funds without the monthly financial burden during your retirement years. You retain title (ownership) to your home as long as you meet the basic requirements of the loan. The loan is ultimately repaid when you or the last surviving borrower (or non-borrowing spouse) pass away through the sale of the property or refinance by your heirs.

Homeowners with at least one borrower 62 years of age on title to the home and with sufficient equity may be eligible. The home must be the borrower’s primary residence. A borrower's financial capacity and credit history are reviewed to insure the long­ term success of your loan and ability to pay ongoing property taxes and homeowner 's insurance and other housing related expenses.

Your credit score is not the determining factor if you are eligible for a Home Equity Conversion Mortgage. An applicant's overall credit history, income and existing financial obligations are considered to determine if a borrower has the financial capacity to meet the ongoing obligations of the loan in regard to the property’s expenses. In some instances, a set-side of available funds may be required to meet future property obligations such as property taxes and insurance.

Yes. Although the HECM doesn't require monthly mortgage payments, you are still required to keep making timely property tax and homeowner's insurance premium payments just as you would with a traditional mortgage.

You retain title and ownership to the home just as you would with a traditional mortgage. The only time a borrower could risk losing ownership to the home would be due to a loan default for failure to pay property taxes and homeowner's insurance or maintaining the property.

No. You can have an existing mortgage balance and as long as the proceeds of the HECM are sufficient to pay off the existing mortgage, closing costs and fees, you may qualify.

The Home Equity Conversion Mortgage (HECM) can be used with single family, 2-4 unit multi-family such as Town Homes and others, planned unit developments (PUD’s) and FHA-approved condominiums. In addition, the property must be the borrower's primary residence. 

The amount of your loan proceeds varies based on the age(s) of the borrower(s), current interest rates, the home's appraised value and the HECM loan product chosen. You will receive an estimate showing you possible loan proceeds for several different loan programs upon completing a simple interview with us.

Similar to traditional mortgages, the HECM costs include: origination fee, third party closing costs, and an upfront FHA insurance premium. Most of these costs can be financed into the loan limiting your out-of-pocket expenses. Applicants should anticipate out-of-pocket costs for an appraisal and required HECM counseling.

Yes. FHA allows for the purchase of a home in one transaction with the HECM purchase program also known as the H4P program. You can use the proceeds from the sale of your previous home or other cash for your down payment and finance the balance with the HECM resulting with no mortgage payments. Your down payment is determined by the home's purchase value less available HECM proceeds and loan costs. Most importantly, you don't have any monthly mortgage payments for your new home!

The HECM has several flexible payout options: a lump sum, partial lump sum payout, monthly installment payouts or a line of credit, or a combination of these options. Your access to proceeds is partially limited in the first year only, but you will have access to remaining funds one year after your initial closing. The unused funds in the line of credit are not charged interest until used and your available credit line may actually increase each month when unused. (Great way to earn additional income on your credit line)

Your HECM loan is not due and payable until one of the following occur: 1- the last surviving borrower (or included non-borrowing spouse) has passed away, 2- the home is no longer the primary residence of at least one borrower (or non­borrowing spouse),3- an absence by both borrowers for a period longer than 12 months, 4- the borrower fails to pay property taxes and homeowner's insurance as required or 5- the property is not maintained and deteriorates to a condition deemed unreasonable by HUD.

As an experienced Home Equity Retirement Specialist, I will walk you through every step required for your Home Equity Conversion Mortgage loan and answer any questions you may have before you get your loan process started.

With a HECM loan, you still own your home. You retain the title and ownership during the life of the loan and can sell your home at any time, at which time the loan balance becomes due and you will receive all the remaining equity from the sale price. With a HECM you simply have a normal Mortgage lien recorded, as you would a tradition mortgage, thus requiring payoff at a closing but again, you, or your heirs/estate, then receive the remaining proceeds from the sale.

Many borrowers use a HECM loan to pay off an existing mortgage and eliminate monthly mortgage payments.

HECM loans may be utilized by seniors needing to increase their ‘Tax Free” Cash Flow as well as by Affluent senior borrowers who are using HECM loans as part of their financial and estate planning to insure an even Sequence of Returns thru prudent leveraging of the HECM LOC to back-up to their existing Portfolios.

64,489 reverse mortgages were issued in 2022 and over 1.2 million seniors have taken out HECM loans as of June 2020. According to a survey, 83% of seniors who took out a HECM said they were either satisfied or very satisfied with their decision.

You can make payments anytime, and in any frequency, to reduce your HECM loan balance. A HECM does NOT have any “Pre-Payment” penalties. 

The HECM is a "non-recourse" loan. This means that no assets other than the home may be used to repay the debt. Thus, your Estate, or Heirs, cannot be charged for any deficiency, if there is any, between the sale of the home and the HECM balance owed.