Elimination Of Current Mortgage

Use a reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), to pay off your existing mortgage and eliminate all further payments. An HECM is a specialized loan tailored for individuals aged 62 and above.

What Is A Home Equity Conversion Mortgage?

Since 1988, the Federal Housing Administration has insured this program, providing financial support to eligible homeowners. According to the Federal Trade Commission, reverse mortgages enable homeowners to convert a portion of their home’s equity into cash, all without the necessity of selling the property or making regular monthly mortgage payments. Homeowners may even choose to include obligations such as property taxes, insurance, and maintenance.

In contrast to traditional mortgages, where monthly repayment is necessary, recipients of a HECM are not required to repay the funds until the last borrower no longer resides in the home. This unique feature distinguishes reverse mortgages from conventional loans, as there are no obligatory monthly mortgage payments throughout the duration of the loan. The flexibility offered by reverse mortgages provides older homeowners with an alternative financial solution, allowing them to access the equity in their homes without the immediate burden of repayment.

How To Qualify?

  • The borrower must be at least 62 years of age.
  • The borrower must be listed on the title of their home and plan to live in it as their primary residence. Borrowers must continue paying property taxes, home owner’s insurance, and applicable home owner association (HOA) dues.
  • A financial assessment is required to ensure that the borrowers can afford to maintain the home and stay current on all property taxes and insurance throughout the life of the loan.
  • The property must be in good condition.
  • All borrowers must attend a counseling session with a third-party, HUD-approved counselor. This counseling session ensures the program is right for the borrowers and their specific situation and that they understand the program.
  • Many property types are approved with the program, including single-family homes, 2-4 unit properties where the borrower occupies one unit, FHA-approved manufactured homes, and FHA-approved condominiums.