Reverse Mortgage Options

Home Equity Conversion Mortgage
Private Reverse Mortgages

Home Equity Conversion Mortgage (HECM) reverse mortgages

A Home Equity Conversion Mortgage (HECM) is a federally insured reverse mortgage. Ninety-five percent of all reverse mortgages are HECMs. The Federal Housing Administration (FHA) sets limits on how much a HECM reverse mortgage lender may lend you—based on your age, your home's value and location—and what your total loan costs will be. HECM loans give you a wide choice in how you may receive the cash from the reverse mortgage. HECM loans generally provide the larger loan advances than other reverse mortgages. [An exception is Financial Freedom's Cash Account Plan reverse mortgage which may offer cash advance opportunities significantly higher than other reverse mortgage products.]

Home Equity Conversion Mortgage (HECM) Frequently Asked Questions

Q. Since federally-insured HECM loans are regulated by the U.S. government, are all HECM loans the same?

A. Yes and no. All HECM lenders must follow HUD rules and many of the loan costs.

Q. What are the eligibility requirements for a HECM loan?

A. You, and any other current owners of your home, must be aged 62 or older. The home must be your primary residence. It may be either a single-family residence in a 1- to 4-unit dwelling, a condominium, or part of a planned unit development (PUD). Though some manufactured housing is eligible, most cooperatives and most mobile homes are not. The home must be at least one year old and meet HUD's minimum property standards*. Finally, you must agree to discuss the program with a counselor from a HUD-approved counseling agency.

* Note: If the house is not up to HUD's standards, you may use the HECM loan to pay for repairs that may be required to bring it up to their standards.

Q. Are there any advantages by taking my HECM loan as a line of credit?

A. Yes. That's because a HECM line of credit continues to grow over time, increasing the amount of cash available to you until you withdraw all of it. That is possible because the remaining balance in your line of credit grows by the same total rate that is charged on your loan balance.

Consider this example. Say you have a HECM line of credit of $150,000 and you withdraw $25,000. The remaining line of credit would be $125,000. If your next withdrawal is a year later you would have more than $125,000 available to you. Here's how it works to your advantage: if the total loan rate is, for instance, 6%, your available credit line would be 6% higher than it was a year earlier. Instead of having $125,000 available you would have $132,500 in your line of credit (6% of $125,000 = $7,500). In this example, you would have an extra $7,500 available to you in year two of your reverse mortgage. A nice added bonus.

Q. How are the interest rates computed for a HECM reverse mortgage?

A. The HECM rates are based on the T-Bill and Libor (U.S. Treasury bills) interest rate plus margin. It is adjusted either monthly or annually, or the rate can be fixed for life.

Q. Are HECM loans available throughout the
U.S. ?

A. HECM loans are available in all 50 states, the District of Columbia , and Puerto Rico . (HECM credit line options are available in all states except Texas .) HECM fixed rate loans are available in most states.

Fannie Mae Home Keeper® Reverse Mortgage

A Home Keeper® reverse mortgage is Fannie Mae's conventional market alternative to the Home Equity Conversion Mortgage (HECM). It is a government-sponsored enterprise program and works like a HECM loan in many ways. However, a Home Keeper® reverse mortgage addresses a few needs that are not met by HECM loans, such as individuals with higher property values, condominium owners, and seniors wishing to use a reverse mortgage to purchase a new home.

Private Reverse Mortgages

These programs have been designed specifically to meet the needs of senior homeowners with substantial home equity.

These private reverse mortgages have virtually no limit on home value or the amount of the loan. As a result, the amount of money available to the homeowner may be substantially greater with a private reverse mortgage than with other options.

There are multiple options within various lenders. Each plan is different and offers unique advantages specific to the borrower's needs, wants and circumstances.

Ask Us About The Products When You Call For More Details.