most people have not heard of it and some people have misperceptions about how it works.  

The Home Equity Conversion Mortgage (HECM), also know as the FHA Insured reverse mortgage, is designed for homeowners 62 and older.  It enables us to own our home forever and live comfortably without  a payment.  It was created by Congress in 1989 and signed into law by President Ronald Reagan. 

The program's benefits are insured by the Federal Housing Administration and since it is designed to appeal to as many people as possible major concerns of senior homeowners are addressed by it to protect us.

We are able to "convert" the value that has built up in our home into tax free money.  There are four ways to convert our equity into money we can use:

1.     rent out a portion of it

2.     sell it

3.     take a traditional mortgage which comes with a monthly payment, or

4.     do an FHA Insured reverse mortgage.

The reverse mortgage is the only option that enables us to own our home forever, live more comfortably in it, and never have a monthly payment to make!

The first requirement is that we pay off any existing mortgages or home equity loans.  We can use the money that remains for whatever we would like.  There are no monthly payments.  Only when we are no longer living in the home is any payment due. 


Two important aspects to consider and understand are:

1. the reverse mortgage is a growing balance loan. The money that we have used, plus interest, is due when the home is no longer our primary residence.  This means that the equity in the home may be lower.
2. There are fees to set up the reverse mortgage.  The total amount of the fees depends on each specific homeowner but are usually about 5% of the home's value.  That is less than it would cost to pack up, sell the home, and move to a new home.  The fees are not paid "out of pocket".  They are included in the loan balance.

Remember with a reverse mortgage we keep our home and have no monthly payments.   




                      Call us today to speak with a Certfied Senior Advisor 
                                 to answer your specific questions.