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Reverse Mortgages:

“Reverse Mortgages” are mysterious to many people. The current federally insured ”reverse mortgage” is under the HUD FHA program, and is called the Home Equity Conversion Mortgage (HECM) program.

It is simply just an alternative form of home financing. With a HECM mortgage you can you can refinance your current home, set up a line of credit with it, or use the program to purchase a new home. A key element with a HECM loan is NO MORTGAGE PAYMENTS.

As with any traditional mortgage you can refinance out of it, pay it off, or sell the home and retire the mortgage.

One of the owners must be at least 62 years old to participate in the program.

It is common for a couple in their 60’s to sell their existing home to relocate. They may want to pay cash for their new home to avoid making house payments going forward. A HECM loan may allow them to upgrade their purchase to a much nicer home by paying about half down while still eliminating their mortgage payments for life.

Refinancing your existing home with an HECM loan is a strategy to pull out cash to pay large, unexpected expenses, or to invest the equity elsewhere while not incurring any house payments going forward.

A couple of cautions: The borrowers still must be able to pay their property tax and property insurance going forward. The loan is a bit more expensive because mortgage insurance is included in the financing cost.


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