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A HECM Loan Defined
A Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage, is a Federal Housing Administration (FHA) insured1 loan which enables you to turn a portion of your home’s equity into usable funds without having to make monthly mortgage payments.2
If you are 62 years of age or older and have sufficient home equity, you may be able to get the cash you need to:
- Federal Housing Administration (FHA) mortgage insurance premiums (MIP) will acrue on your loan balance. You will be charged an initial MIP at closing. The initial MIP will be 2% of the home value but not to exceed $12,723. Over the life of the loan, you will be charged an annual MIP that equals .5% of the outstanding mortgage balance.
- You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance and maintain the home according to Federal Housing Administration requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
- Your current mortgage, if any, must be paid off using the proceeds from your HECM loan.