Reverse (HECM) Mortgage

A reverse mortgage is a type of home loan that allows homeowners who are 62 years or older to access the equity in their homes. With a reverse mortgage, the lender makes payments to the borrower, either in a lump sum or in monthly installments, based on the equity in the home.

Unlike a traditional mortgage, with a reverse mortgage, the borrower does not make monthly payments to the lender. Instead, the loan is repaid when the borrower sells the home, moves out, or passes away.

Reverse mortgages can be a good option for older homeowners who have significant equity in their homes and need additional income to support their retirement. With a reverse mortgage, the borrower can receive payments without having to sell the home or move out.

There are several types of reverse mortgages, including the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). HECM loans have specific eligibility requirements, such as the borrower must be at least 62 years old, own the home outright or have a significant amount of equity, and live in the home as their primary residence.

It is important to note that while reverse mortgages can be a good option for some homeowners, they can also come with high fees and interest rates. Borrowers should carefully consider the terms of the loan and speak with a financial advisor or HUD-approved counselor before taking out a reverse mortgage.