Reverse Mortgage AKA HECM

A reverse mortgage loan, like a traditional mortgage, allows homeowners to borrow money using their home as security for the loan. Also like a traditional mortgage, when you take out a reverse mortgage loan, the title to your home remains in your name.

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What is a reverse mortgage?

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If you’re looking for ways to supplement your retirement income or access your home equity with a Reverse Mortgage, Federal Housing Administration (FHA) insured reverse mortgage loan may be the answer.  A reverse mortgage loan allows you to access a portion of your home’s equity to obtain tax-free funds without having to make monthly mortgage payments. 

*While HECM programs start at age 62, there are proprietary reverse mortgage programs that start as young as 59.5 and LESS programs that are available for homeowners of any age. 

How will this work for me?

 If you’re 62 years of age or older and have sufficient home equity, you may be able to get the funds you need to:

• Pay off your existing mortgage
• Continue to live in your home and maintain the title
• Pay off medical bills, vehicle loans or other debts and improve your cash flow
• Fixed Rate and Adjustable Loan types available
• Fund necessary home repairs or renovations
• Build a “safety net” for unplanned expenses
• Sell your current home, bank most of the money and buy a new home using a reverse mortgage

What do I need to do for this to work for me?

Eligibility
Applying for a reverse mortgage loan is simple. To be eligible for a reverse mortgage loan, some
key requirements are:

• One homeowner must be at least 62 years of age or older
• Live in your home as your primary residence and have sufficient equity
• Be able to pay off your existing mortgage through the reverse mortgage loan proceeds
• Live in a single family home, two-to-four unit, owner-occupied home, townhouse, approved condominium or manufactured home
• Must meet financial eligibility criteria as established by HUD

Requirements
In addition to the eligibility requirements, you must also meet the following conditions to obtain
a reverse mortgage loan:

• Complete a HUD approved counseling session
• Maintain your home according to FHA requirements
• Continue to pay property taxes and homeowners insurance
• You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance and maintain the home according to Federal Housing Administration requirements.
• Your current mortgage, if any, must be paid off before obtaining any funds from a HECM loan; you can use proceeds from the HECM loan for this purpose. - Not applicable to HECM for Purchase
• If your home needs repairs to be eligible for a HECM loan, you may be able to use the proceeds of the loan to accomplish this.

How does this process work?

How a HECM Loan Works

We offer FHA insured HECMs; a safe, secure loan that lets you access your home’s equity to get cash for your retirement funding needs. We also offer safe Jumbo-Reverse loans from $500,000 to $6 million dollars. (Finally we have LESS plans from $25,000 to $500,000 that have no age requirements and can use your primary residence, a vacation home or residential investment property as collateral. Click on LESS above to read about how these work.)

The amount you receive is based on current interest rates, the age of the youngest borrower and the lesser of the appraised value of your home, sale price or the maximum lending limit. The funds available to you may be restricted for the first 12 months after loan closing, due to HECM requirements. In general, the older you are, the more equity you have in your home and the lower your mortgage loan balance; the more money you can expect from a HECM loan.
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Receiving Your Money
The HECM is available as either an adjustable or fixed-rate loan. With the adjustable rate, the rate is adjusted monthly based on the LIBOR (London Inter Bank Offered Rate). The fixed-rate HECM maintains the same interest rate over the life of the loan. You may need to set aside additional funds from loan proceeds to pay for taxes and insurance.

Repaying the Loan
Loan repayment is not due as long as you meet the loan obligations such as living in the home as your primary residence, continue to pay required ​property taxes and insurance, and maintain the home according to FHA requirements. You or your heirs will not be required to pay more than the value of your home at the time the loan is repaid; even if your loan balance exceeds the value of your home, provided you or your heirs decide to sell the home. Best of all, any remaining equity goes to you or your heirs once the loan is repaid.