What are HECM Reverse Mortgages?
HECM Reverse Mortgage Explained
Commonly called a HECM reverse mortgage, the “Home Equity Conversion Mortgage” was developed and is regulated by the FHA and HUD government agencies, to help Florida homeowners, age 62 and older, access the equity in their homes.
It’s called a reverse mortgage because of the way the loan works, where instead of the borrower paying back the lender for money borrowed, the lender pays the borrower money based on the equity in the home. Since it’s inception, HECM reverse mortgages have helped millions of U.S. homeowners access their home equity when traditional HELOC loans, typically requiring a significant and steady income source, were not a viable option.
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Important Disclosure
- The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home; and
- Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees.
- The loan balance grows over time and interest is charged on the outstanding balance
- At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds
- Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment.
Is the HECM Reverse Mortgage Safe?
Industry Corrections and Consumer Safeguards
Yes it is, and although HECM reverse mortgages had developed a negative stigma based on under-regulated practices prior to the 2008 mortgage meltdown, that perception has changed. That is primarily due to strict regulations and oversight imposed. Plus there are safeguards to ensure the safety of borrowers from unfair, or irresponsible marketing and lending practices. HECM reverse mortgage borrowers are never set up to fail, or to default on their loan obligations that result in foreclosure. Non adherence to these new laws can now result in multimillion dollar fines and in some cases jail time. Thus, making it a much safer loan option than ever.
As with any loan, the possibility of default does still exist with a HECM reverse mortgage, but it literally requires the borrower to neglect paying their property tax, home insurance, HOA dues (if required) or failure to maintain the home to a livable standard. Be sure to read our pros and cons page for a more comprehensive understanding of the factors that play into the safety of this loan.
Are You Qualified for a HECM Reverse Mortgage?
Wondering if you qualify for a HECM Reverse Mortgage? If you answer yes to the following questions you most likely do, but to be sure, give us a call at (800) 516-7155 to confirm your eligibility or read more about the qualifications here.
- Are you or the borrower age 62 or older?
- Do you have 50% or more equity in your home?
- Plan to keep the Florida home as your primary residence?
- Do you understand that you must continue to pay your property taxes and insurance?
- Are you willing to complete mandatory counseling?
- Do you accept that an appraisal is required on the subject property?
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What Are The Costs & Fees?
Learn About the Pros & Cons
Advantages of Aging In Place
What Are The Qualifications?
What are Reverse Mortgages Recap
We hope that our explanation of HECM Reverse Mortgages gave you a better understanding of this unique loan product. Our main goal is to ensure you have the information you need to make an educated decision about reverse mortgage loans and access to us as a trustworthy local Florida lender.
Reverse mortgages can be a great option for qualified Florida homeowners looking to augment their retirement income or have additional financial resources that allow them to maintain or improve the freedom and lifestyle they’ve earned over years of hard work and sacrifice.
If you would like to have a free, no obligation discussion about the details of the reverse mortgage loan products available, do not hesitate to give us a call, we’d love to meet with you at your home or have a talk on the phone to help you learn everything you need to know abou the HECM reverse mortgage loan.
For more information give us a call at (800) 516-7155
Or use our reverse mortgage calculator to get an estimate of the proceeds you may qualify for!
Mortgage and Insurance Solutions Inc. NMLS #1124365