Why a HECM?
If you expect to live in your home for several years, you could consider a HECM. Designed for homeowners age 62 and older, a HECM is a way for older adults to access the equity in their home while allowing them to live in their own home and maintain their independence.
HECM reverse mortgages offer many different alternatives on interest rates, closing costs, how much money you can access and how you can choose to receive your proceeds.
- With a HECM, you can choose how much- or how little- of the available money you want to take.
- You can opt to receive more funds and a lower interest rate.
- Or, take less money and preserve more of your equity so it’s available in the future for you or your estate.
The money available to you from the HECM reverse mortgage is tax-free, and generally doesn’t affect Social Security or Medicare benefits.
Most HECMs have both variable and fixed interest rates. These rates are tied to a published financial index, which changes with market conditions.
Loan closing costs for a HECM reverse mortgage are the same as what you would pay for a traditional mortgage. These can include an origination fee, appraisal, title fees, and other closing costs. You are able to finance these costs as part of the mortgage.
An advantage of the government-insured HECM is that you (or your heirs) will never owe more that the value of the home at the time the loan is due. And of course, if the sales price of the home exceeds the loan balance, then the amount in excess of the loan belongs to you (or your heirs).
