Home Equity Conversion Mortgage (HECM)
Also known as the " Reverse Mortgage"
 
What is a Reverse Mortgage?

• A Reverse Mortgage is an FHA loan available to people over 62 years of age who live in the home as their primary residence.
• The loan amount is based on the FHA appraised value of the home and the age of the youngest borrower. Maximum value of up to $625,500 is used in the calculation.
• There are no required monthly principal and interest payments. (Borrowers must still pay homeowners insurance, taxes, and any other related costs such as Homeowners Association Dues.)
• The loan is repaid when the last of the borrowers  move from the property, sell the property, transfer the title, or die. Foreclosure can occur if taxes or insurance are not paid, if the property is not maintained in accordance with FHA guidelines, or the borrowers fail to meet their obligations of the loan.
• The borrower retains title to the property.
• Funds from a reverse mortgage are not considered income and therefore are not taxable.*                          

             *Consult your tax advisor.

• The reverse mortgage is a non-recourse loan. Repayment of the loan is the responsibility of the borrowers if still alive, and of the estate if the borrowers have died. Repayment is limited to the appraised value of the property at the time the loan is repaid, up to 95% of the appraised value.

 

​When is a Reverse Mortgage Not a good option?

• If you plan to move or sell in the near future
• If you want to leave more equity to your heirs

What are the qualifications for a Reverse Mortgage?

• All borrowers must be 62 years old or older.
• All borrowers must attend a counseling session with a HUD-approved counselor.
• There is no credit score requirement.
• The property must be properly insured and pass an FHA appraisal inspection.

 
What Properties are Eligible?
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     ●    Single Family Homes
     ●    2-4 unit multi-family properties. Borrowers must live in one of the units.
            (2-4 unit properties are not eligible for the HECM for purchase program.)
     ●    Condominiums must be an FHA-approved project.
     ●    Townhomes
     ●     Manufactured homes that meet FHA-approved manufactured home guidelines. 

Why Choose a Reverse Mortgage?

• Pay off an existing mortgage or credit cards
• Medical expenses
• Purchase of Long-Term Care Insurance
• Supplement Social Security income for day-to-day living expenses
• Home improvements, modifications, additions
• Provide for a more comfortable and enjoyable retirement
• Purchase of a new home, condo, vacation home, etc.

 
What are My Reverse Mortgage Options?
Borrowers can choose the way they receive reverse mortgage proceeds that meet their financial plans and needs.

• A lump sum
• A line of credit
• Monthly payments
• Any combination of the above

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Payment Options
There are at least 5 ways to receive ongoing reverse mortgage payments. 
This gives you the  flexibility to choose the right option for your unique circumstances. 

 
  ❶       Line of Credit**
 ❷    Term      (Monthly Payments to You for a Fixed Period)**
 ❸      Tenure    (Monthly Payments to You as Long as You Live in the Home)**
  ❹      Modified Term       (Term and Line of Credit Combination)**
  ❺      Modified Tenure    (Tenure and Line of Credit Combination)**
  
​You have the option to change plans after closing. There is a fee and you must still have available funds and be in compliance with all reverse mortgage  requirements.
   **As always, you must continue to own and occupy as your primary  residence,         continue to pay property taxes and insurance, and maintain the property.                  

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 Can I Purchase a Home with a Reverse Mortgage?
Yes-Using the HECM for Purchase Program


Why Purchase with a Reverse Mortgage?
   •  Transition from multi-story home to single story 
   •  Downsize or Upsize 
   •  Move into 55+ community
   •  Less Yard, Less Maintenance
   •  Relocate closer to kids and grandkids
   •  Closer to shopping, medical, etc 

 What Property Types are Eligible?
    •  Single Family Residence
    •  HUD Approved Condo
    •  Townhouses
     

Can I Make Payments  on a Reverse Mortgage?
You can make a full or partial repayment at any time with no prepayment penalty.

Which lender should I choose?
The simple answer is the one you feel most comfortable with. Look for a lender with many years of experience in reverse mortgage lending and a loan officer that specializes in the field.

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Simplify the Process

George Stewart has been a Reverse Mortgage Consultant in SC since 2002 and can simplify the entire process. He is a good listener and will try to make a Reverse Mortgage easy to understand.