There are some pretty great things that can happen when you turn 62 years old. You can start receiving your retirement benefits, you can enjoy senior discounts at stores that offer them, and you can tap into your home’s equity with a reverse mortgage.
A reverse mortgage allows homeowners who are 62 or older to borrower against the equity in their home. With a reverse mortgage, the lender pays you each month instead of you paying them. One of the most popular reverse mortgage options is a home equity conversion mortgage (HECM), PrimeLending’s reverse mortgage option.
WHAT IS A HECM?
A home equity conversion mortgage (HECM) is a type of reverse mortgage that allows borrowers who are 62 or older to covert a portion of their home’s equity into cash, which is insured by the Federal Housing Administration (FHA) and is available through HUD (the Department of Housing and Urban Development)1. HECMs are one of the most popular reverse mortgage options among qualified borrowers.
Your reverse mortgage loan amount will depend on your home’s current equity and the loan will not become due until you sell or vacate your home. In order to get a HECM, you need to meet certain eligibility requirements including:
- Must be 62 or older
- The property is your primary residence
- Own your home outright or paid down the mortgage on the property
- Have equity in your home
BENEFITS OF A HECM REVERSE MORTGAGE
One of the benefits of a HECM is that you can choose to receive your HECM funds as a monthly payment or a lump sum. Other benefits of a HECM may include:
- Using the funds to consolidate any other debt
- Supplement your income
- You continue to own the home
- No more monthly mortgage payments
If you are 62 or older and are curious about how to access your home equity without having to sell your home, a HECM could help you fulfill some of your goals. Talk to a PrimeLending mortgage professional to learn more about your home financing options today.
These are brokered loan products. Not available in the following states: NY, NC, or HI. All credit decisions for brokered loan products will be made by the third-party lender. Restrictions and limitations apply.
1Reverse Mortgages are neither “endorsed” nor “approved” by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. It is strongly advised that you consult with your family and/or trusted financial planner when considering any reverse mortgage loan.
You must still live in the home as your primary residence, continue to pay required property taxes, homeowners’ insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure. As required by FHA, you will be charged an up-front mortgage insurance premium (MIP) at closing and, over the life of the loan, you will be charged an annual MIP abased on the loan balance. Your current mortgage, if any, must be paid off using proceeds from your HECM loan. If your home needs repairs to be eligible for a HECM loan, you may be able to use the proceeds of the loan to accomplish this. Generally, the money received is not considered income and could be tax free, please consult your tax advisor and appropriate government agencies for any effect on taxes or government benefits.
