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Unlock your home's hidden equity: HECM
A HECM gives you the power to unlock the equity built up in your home while you continue to live in it. With additional funds freed up you can lower your expenses, do renovations, take off on a trip or simply have funds available for when you need them.
Unlock the potential in your home's equity. With a HECM reverse mortgage you'll be able to:
- Pay off existing mortgage
- Stay in your home long-term
- Increase your buying power for purchasing a new home or condo
- Supplement income for regular expenses
- Diversify overall retirement strategy
- Cover medical expenses
- Pay for in-home care
- Renovate your home
- Purchase insurance
- Go on the trip of a lifetime
- Start a new business
- Help your grandchildren pay for college
- Or simply have savings available for the future
Understanding Reverse Mortgages
It is a loan that converts your home equity into cash. The unique benefit is that you don't need to pay it back month after month. Interest and fees are added to the loan balance over time.
Borrowers must continue to pay taxes and insurance as always while upholding the terms of the loan.
Live your retirement dreams now that your biggest asset is working for you.
The loan is payable at the time you leave the home, and it is a non-recourse loan which means you or your estate cannot owe more than the value of the property.
HECM/HELOC comparison
While both a HECM and a HELOC are considered tools to fund retirement goals, there are a number of unique differences between the two.
| HECM | HELOC | |
|---|---|---|
| You still own your home | ||
| No monthly payments as long as you meet loan obligations | ||
| The reverse mortgage line of credit cannot be frozen, reduced or revoked | ||
| Unused line of credit grows over time | ||
| The loan does not need to be repaid until the house is sold or is no longer your primary residence | ||
| No pre-payment penalties or annual fees | ||
| Government insured by the Federal Housing Administration | ||
| Non-recourse loan, you will never owe more than your home is worth |
Frequently Asked Questions
Still not sure about something? Click below to get quick answers on some of our most frequently asked questions.
How does HECM work?
- The amount of loan proceeds is determined by age of borrower and appraised value of home.
- Financial Assessment to determine long-term ability to pay taxes and insurance
- Independent counseling
- Formal Appraisal
- Proceeds pay off your current mortgage.
- Cash can be a lump sum and you can get the remainder as installment payments or a line of credit. The unused portion will grow every month providing a significant cushion for the future.
- Continue to pay your taxes and insurance and to uphold the terms of the loan.
- With room in your budget after eliminating mortgage payments, and with cash in hand or a growing line of credit, create a retirement you feel good about.
What is a reverse mortgage?
A reverse mortgage is a loan that enables homeowners and homebuyers age 55* or older to convert some of their home equity into cash or a line of credit. Some loans also let homeowners finance a new home purchase. With a reverse mortgage, you make no loan payments†. You continue to live in and own your home.
Unlike a traditional home equity loan or home equity line of credit (HELOC), you don’t have to repay a reverse mortgage until the home is sold** or the last surviving borrower (or a non-borrowing spouse who meets certain requirements) no longer lives in the home. The homeowners must maintain the condition of the home and stay current with property taxes and hazard insurance.
*For certain HomeSafe® products only, excluding Massachusetts, New York, and Washington, where the minimum age is 60, and North Carolina, Texas, and Utah, where the minimum age is 62.
Am I eligible?
To be eligible for a reverse mortgage, you must meet the following criteria:
- You must be age 55* or older.
- The home must be the borrowers’ primary residence.
- The home must meet Federal Housing Authority (FHA) minimum property standards and flood requirements.
- The home must be one of the following property types: single-family home; a two- to four-unit home with one unit occupied by the borrower; or a HUD-approved condominium. With new construction, you must have a Certificate of Occupancy or equivalent before you apply.
- You must have sufficient home equity. A Reverse Mortgage Specialist from Finance of America Reverse LLC (FAR) can tell you if you have enough home equity to qualify.
*For certain HomeSafe® products only, excluding Massachusetts, New York, and Washington, where the minimum age is 60, and North Carolina, Texas, and Utah, where the minimum age is 62.
How much money can I get?
You may receive a portion of your home equity. How much depends on a number of factors, including the age of the youngest borrower or non-borrowing spouse, your home value, the amount of equity, FHA lending limits, the current interest rate, and the reverse mortgage product and payment option you choose. An FAR Reverse Mortgage Specialist can give you a free quote that’s tailored to your specific situation.
Download the HECM Brochure
