Home Equity Conversion Mortgages (HECMs):

Federally-insured reverse mortgages backed by the U. S. Department of Housing and Urban Development (HUD). HECM loans enable you to withdraw a portion of your home’s equity and can be used for any purpose. How much you can borrow with a HECM or proprietary reverse mortgage depends on several factors, including:

• Your age.
• The type of reverse mortgage you select.
• The appraised value of your home.
• Current interest rates.
• A financial assessment of your willingness and ability to pay property taxes and homeowner’s insurance.

 

Home Equity Conversion Mortgage for Purchase (H4P):

A H4P (a type of HECM backed by the FHA) enables senior homebuyers to purchase a new primary residence that better suits their needs and obtain a reverse mortgage in one transaction. You can use a H4P if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing. This type of HECM reverse mortgage, if it is offered in your area, may allow you to:

• Build a new customized home.
• Relocate closer to friends and family members.
• Purchase a home in senior housing community.
• Downsize to a smaller, easier-to-maintain home.
• Purchase a primary residence suitable for your current needs.
• Move into a new home that’s easily accessible with modern amenities.

 

Benefits of a HECM or H4P:

• Eliminates monthly payments.*
• Increases purchasing power.
• Lowers the cost of living.
• Retain full home ownership.
• Protects heirs from financial liability.
• FHA insured.

* Homeowner is still responsible for paying home insurance premiums, property taxes and home maintenance costs.