Home Equity Conversion Mortgage

The Home Equity Conversion Mortgage (HECM) programs gives seniors who are homeowners to withdraw money through the equity in their home in the form of monthly payments for life or a set fixed term, or a line of credit or in a one time lump sum.

The main benefit of a HECM allows older homeowners to stay in their home while taking advantage of their home equity that is turned into income. The federal government requires seniors interested in reverse mortgages to receive free mortgage consueling from HUD approved reverse mortgage counseling agency before the are able to apply for a reverse mortgage.

Senior borrowers have five options that they can choose from:

1. Tenure - Borrowers receive monthly payment from the lender for as long as the borrower is alive and the home is occupied as a primary residence.
2. Term - Borrowers receive monthly payments for a fixed period that is determined by the borrower.
3. Line of Credit - Borrowers are able to withdrawl money at times they choose.
4. Modified Tenure - Borrowers are able to receive monthly payments until they pass away and the home is occupied as a primary residence and are able to withdraw money when they choose.
5. Modified Term - Borrowers receive monthly payments for a fixed period and have a line of credit available.

To be eligible for a Home Equity Conversion Mortgage, the borrower must meet these requirements:

• 62 years of age or older
• Low mortgage balance or no mortgage
• Received HUD approved reverse mortgage counseling
• Property must be used as the primary residence
• Borrower must own a single-family residence, 1-4 unit building with at least one unit occupied by borrower, manufactured home, FHA approved condominium or a unit in a planned unit development.