Homeowners across the nation are using Home Equity Conversion Mortgages (HECMs) as a valuable instrument in reaching their financial and personal goals. HECM loans can be a secure and beneficial financial tool for seniors who want to access their home equity to obtain tax free* funds.

The Basics

  • The funds available are based on: the age of the youngest borrower or non-borrowing spouse, current interest rates, existing mortgage amount, and the lesser of the appraised value of your home, sale price or the maximum lending limit.
  • Borrowers have the choice to receive their funds in: a lump sum, a regular monthly payment, a credit line, or a combination of these options.
  • Loan programs available: Fixed, monthly adjustable, and annual adjustable.
  • The costs for a HECM loan: Most closing costs and fees can be financed as part of the loan, resulting in little or no upfront costs.
  • Something to consider: HECM requirements may restrict the funds available to you for the first 12 months after loan closing, depending on the loan program selected. The borrower may need to set aside additional funds from loan proceeds to pay for taxes and insurance. Consult your advisor for detailed program terms.

What’s in it for you

  • Eliminate existing monthly mortgage payments*.
  • Stay in your home and the title remains in YOUR name.
  • Heirs inherit any remaining equity after paying off the HECM loan.
  • The HECM loan is a federally insured loan program through the FHA.
  • Loan proceeds are tax-free*.

How to Qualify

  • At least one homeowner must be 62 years of age, or older.
  • Must have sufficient equity in your home.
  • Must be a single family home, 2-4 unit home with one unit occupied by the borrower, townhouse, HUD-approved condominium or manufactured home.
  • Must meet the income, credit and financial requirements associated with the FHA reverse mortgage program.

*Always consult with your tax advisor, financial planning professional or real estate professional. Payment of property taxes, homeowners’ insurance, HOA dues (if applicable) and general maintenance of the property is required. Failure to abide by the terms and conditions to the loan could result in the loan being called due and payable, which could ultimately lead to foreclosure.