HECM Reverse Mortgages

FHA Insured Reverse Mortgage

Home Equity Conversion Mortgage (HECM) is the most common product among reverse mortgage loans. If qualified, it allows you to convert a portion of your home equity into capital, based on your age and your home’s appraised value. The thing that sets HECM apart from the crowd is its US government-insured positioning.

Want to learn more about HECM to make lucrative reverse mortgage decisions? Consult our experts today!

What is a HECM?

HECM stands for Home Equity Conversion Mortgage (Pronounced like “Heck-Um”) – the most common type of reverse mortgage loan.

Like other reverse mortgage loans, a HECM allows eligible borrowers to convert some of their home equity into cash. The maximum amount of the loan is based on the home’s appraised value and the borrower’s age at the time of application. The loan earns interest over time, but no payments are due until the borrower dies, sells the home, transfers his principal residence, or fails to comply with the ongoing requirements of the loan.

However, what sets a HECM apart is the fact that it is insured by the US government, particularly the Federal Housing Administration (FHA). The FHA insurance secures borrowers from lender failure.

In contrast, other reverse mortgage loans, such as propriety reverse mortgages or jumbo reverse mortgages, are backed by private companies instead of the FHA. However, the upside to these reverse mortgages is that they are not subjected to the same governmental restrictions as a HECM, e.g. the maximum loan amount which is currently set at $822,375. This allows borrowers to receive significantly more cash, provided that the value of their home justifies such an amount.

With that said, however, not every person has a high-value home. For the average American, the loan limits of a HECM will likely be sufficient.

Interested to learn more about reverse mortgage HECM Vs. HELOC?

How do you qualify for a HECM?

The requirements of a HECM are vastly different from those of a conventional mortgage.

While conventional mortgages place a strong emphasis on income and credit standing, a qualified HECM borrower need only have the following requirements:

  1. Must be at least 62 years of age.
  2. Must be using the mortgaged property as his principal residence.
  3. Must have completed a reverse mortgage counseling session from a counselor approved by the Department of Housing and Urban Development (HUD), which gives you some basic information regarding the HECM and helps you decide if you should get one.
  4. Must have little or no existing mortgage on the same property. If there is an existing mortgage, the balance thereof must be small enough to be paid by the HECM proceeds.
  5. Must not have delinquent federal loans or property taxes.
  6. Must pass the financial assessment test, which determines if the borrower is able to comply with the ongoing requirements of the HECM, e.g. timely payment of property taxes and insurance premiums, and keeping the mortgaged property in good condition.

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What properties are eligible for HECM?

To qualify for a HECM, the mortgaged property must be used as your principal residence. Thus, secondary homes or investment properties are not eligible. The property must be either a single-family home or 2 to 4 unit home.

Reverse mortgage on manufactured homes may be eligible if they comply with the minimum requirements set by the FHA.

Reverse mortgage on condo may also be eligible if they are part of an HUD-approved project.

Ideally, we would provide you with a complete list of these requirements. However, there is simply too much information to consolidate in one post. The minimum requirements are provided in a number of HUD Manuals and Mortgage Letters, which need to be thoroughly studied to determine which requirements apply to your specific property. The best way to determine if your property qualifies for HECM is to have it examined or appraised by an expert, which your reverse mortgage lender can easily refer you to.

When does your HECM need to be repaid?

Like other reverse mortgage loans, a HECM need to be repaid when the borrower

  1. dies,
  2. sells the home,
  3. transfers his principal residence, or
  4. fails to comply with the ongoing requirements of the loan.

When the borrower dies, his heirs can still keep the mortgaged property, provided that they pay off the balance of the HECM. However, if the lender does end up foreclosing the property, the proceeds of the sale will be used to pay off the loan and any excess will be given to the heirs. But if the proceeds are less than the loan balance, the lender cannot recover the deficiency from the heirs. Instead, the lender must recover the deficiency from the loan’s FHA insurance.

If the borrower chooses to sell his home, he must use the proceeds of the sale to pay off the balance of the HECM. If there is any excess, he is allowed to keep it. On the other hand, if the proceeds of the sale are less than the balance and the property is sold at its appraised value, the entire amount must be used to pay off the balance and the lender must recover the deficiency from the FHA insurance.

If he transfers his principal residence, the balance must also be repaid. He may choose to sell his house and undergo the process described above or have the same foreclosed.

Complications arise, however, if the borrower’s spouse is still living in the mortgaged property when the borrower dies or moves out. There are several possible scenarios where the spouse can still be allowed to stay in the mortgaged property, but they are too lengthy and complicated to include in this post. If this particular situation concerns you, it would be best to seek expert advice to explore your spouse’s future options.

Finally, if you fail to comply with the ongoing requirements of an HECM, such as the timely payment of property taxes or insurance premiums, and maintenance of the mortgaged property, you will probably receive a notice of default or foreclosure. You will need to act quickly to fix your alleged violations. If property tax and insurance premiums need to be paid but you cannot afford to do so, try asking your reverse mortgage counselor for advice since there may be assistance programs offered by your state or other agencies. On the other hand, if the mortgaged property needs to be maintained, then you should ask your reverse mortgage lender for a list of necessary repairs. Ask different contractors to estimate the cost of repairs. If you cannot afford the repairs, contact your reverse mortgage counselor for advice.

Top HECM Lenders

The Best HECM Program for Seniors

If you’ve been worrying about not having enough cash to pay off certain debts each month, then you may be interested in our HECM program for seniors. HECM is a method of accessing your home’s equity to put cash into your hands now. If you know you’re never going to sell your home, then you could be sitting on a hill of wealth that you’ll never access. Our HECM loan changes that. When you want to get a HECM loan, then you should consider South River Mortgage. Here’s what you need to know about our HECM program for seniors.

home equity conversion mortgage

If you’ve never heard of HECM, then you aren’t alone. Yet a HECM reverse mortgage could be the secret to unlocking wealth for yourself. If you’re wondering what are HECM reverse mortgages, then here’s what you need to know.

HECM stands for home equity conversion mortgage. A home equity conversion mortgage program gives flexibility. You can use it to get a monthly payment, a lump sum of cash, or a line of credit for emergencies. It allows you to access the equity of your home without having to sell it.

In particular, a HECM program for seniors can be beneficial. You can use a HECM program to make a HECM for purchase. Here are some of the benefits you can experience when you utilize our home equity conversion mortgage program:

  • Low home equity conversion mortgage rates
  • The best care from our experienced HECM lenders
  • Enables funding for big purchases like a new property
  • Pays off monthly debt
  • Gives you financial freedom

One of the reasons why we’re the top HECM broker in the country is because we partner with the top HECM lenders in the country to find you low home equity conversion mortgage rates. Even though you won’t have to pay back the HECM reverse mortgage unless you leave the home, it’s still important that you receive the best home equity conversion mortgage rates possible. 

You may also decide that you want to use the HECM loan to buy a HECM property. While there are a few rules that apply to what kind of HECM property you can buy and if it qualifies as a HECM property, you can use it to buy a new home. If you’ve been wanting to move, then it may be possible to use the HECM program to fund that purchase.

A home equity conversion mortgage can also be used to fund medical care or perform needed home repairs. You can work with our HECM reverse mortgage lenders to help you choose a HECM loan that fits your needs the most.

Finally, a fixed-rate HECM can benefit you because it gives you the chance to pay off debt. You can expect a monthly payment from your HECM mortgage through a term option, or a lump-sum cash payment at close. Those funds can be used to pay off credit card debt and other bills. You won’t have to worry about your finances again.

Perhaps you’re new to the idea of a home equity conversion mortgage program but not reverse mortgages. You’ll be pleased to know that when it comes to HECM vs reverse mortgage, they’re essentially the same.

A HECM mortgage is a kind of reverse mortgage. That’s why we work with the best HECM reverse mortgage lenders to help you with setting up a HECM loan as well as another type of reverse mortgage, like a Jumbo Reverse Mortgage.

A home equity reverse mortgage gives you a choice on how to receive your funds. You can either receive a monthly amount or take a line of credit.

When it comes to HECM vs reverse mortgage, there are plenty of ways to benefit.

A home equity reverse mortgage isn’t easy to understand on your own. Our team can help. We’ll show you with our reverse mortgage calculator for HECM just how much the HECM reverse mortgage will cost and how much the HECM mortgage can put in your wallet each month.

Our fixed-rate HECM can also be used to make purchases that can impact your future. Working with our team can give you all the information that you need in deciding whether or not a home equity reverse mortgage is right for you.

Another reason why you should choose our HECM reverse mortgage company is because of our rates. We offer both a fixed-rate HECM and an adjustable-rate HECM that ensures you always receive the best deal for your financial needs. Our low home equity conversion mortgage rate is unmatched.

If you’re curious about HECM, or home equity conversion mortgages, then you need to speak to our reverse mortgage brokers to find the best programs from all the top HECM lenders. Our HECM loan can be a great way to stabilize your retirement. Take our reverse mortgage calculator HECM to see how much you could earn each month. Our HECM lenders are the best because we’ll take the time to explain how a HECM mortgage can impact you and how it can benefit your finances.

Try our top reverse mortgage calculator HECM today to see how your wealth can grow.

Would you like to explore a HECM reverse mortgage for your situation? Call us at (844) 230-6679 if you live in one of the following states. As a local reverse mortgage broker, we work with several reverse mortgage lenders across different states and cities and provide required consultation service with no pressure or obligation.

For other states, contact a good local reverse mortgage specialist who has originated a good number of reverse mortgage loans with a Broker License (NMLS) and preferably holds the designation ‘Certified Reverse Mortgage Professional (CRMP)’.

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