What is a “Home Equity Conversion Mortgage” ?

General Information About FHA Insured HECM posted on United States Federal Housing Association webpage for your review :

What is a Reverse Mortgage?

Reverse Mortgage was originally introduced in 1988 for homeowners, aged 62 and older.

It allowed the lender to be added to the title of your home in the early days of the unregulated program. But no longer is that true.

What is a Government Insured HECM program?

HECM stands for Home Equity Conversion Mortgage. It is the federally regulated, insured and guaranteed program by FHA since 1991. The HECM is a safe way for you to access the equity in your home without ever making a mortgage payment. No lender is added to title and you retain full home ownership rights.

How is this Program “safe” for Senior Homeowners?

No matter what happens in the economy, how much money you receive, or how long you live in your home you will never be required to make a mortgage payment. In addition, no matter what happens to your lender or your home’s value you have guaranteed access to your money.

Who owns the home if I proceed with FHA HECM?

You own the home. However, you pledge the home as collateral.

What happens if, in the future, the Loan exceeds the Value of the Home?

Your FHA HECM Mortgage will continue – thanks to the federal insurance. The line of credit will still be available and monthly disbursements you may have set up, will still be sent to you.

How are Reverse Mortgages different today?

Today’s reverse mortgage, the FHA HECM, is highly regulated by State and Federal laws to make it safe and to protect you. Among others, the following FHA HECM regulations apply: You retain title of the home.

– No equity share is allowed, meaning the lender does not slowly take over your home.

– Fees and costs are federally regulated. How does the FHA HECM compare to a Traditional Forward Mortgage? In a traditional forward mortgage, you make monthly payments to the bank eventually paying off the mortgage over time. With the FHA HECM, you receive cash from your lender as lump sum upfront, as monthly installments or as a line of credit that grows over time. As long as you live in your home you never have to pay off a single dollar of the loan.

What restrictions apply to the cash I receive from a FHA Insured HECM?

It is your money and you can use it the way you want. It’s non-taxable and does not affect Social Security payments. We do recommend that you talk to a competent financial advisor to determine the effect on any other benefits you may be receiving.

When does a FHA Insured HECM become due and what happens then?

When you no longer live in your home or when you pass away, the FHA HECM become due.

You or your heirs have two options:

1) Pay off the FHA Insured HECM including the accrued interest and retain ownership.

2) Give up ownership of the home and receive the difference between the net sales proceeds and the loan balance. You will not be liable for any shortfall if the sales proceeds do not cover the loan.

What are my obligations under a FHA Insured HECM?

With a FHA HECM you retain title to your home. This means that you also have all your obligations as a home owner. You are responsible for home owner taxes and insurances.

Warren Strycker, producer of this webpage, is a veteran licensed loan professional under the laws of the United States. He reaches out to support your questions and leads you through the application to the close. There is no obligation to complete the application once it is begun and borrowers can opt out  of the loan up until three days after “close”. See contact information on home page under “information” tab. Call with any questions, 928 345-1200. “I have witnessed the relief and satisfaction of those who have stepped up to use the home equity in their home to extend income in retirement. Is it a joy to see.”

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418630cookie-checkWhat is a “Home Equity Conversion Mortgage” ?