Home Equity Conversion Mortgages (HECMs) also known as Reverse Mortgages, are a unique type of loan that allow homeowners to convert the accrued equity of their home into usable funds. They are insured by the Federal Housing Administration (FHA) under the U.S. Department of Housing and Urban Development (HUD). Reverse Mortgages enable homeowners 62 & older to convert home equity into tax-free cash without selling or giving up ownership/title to their home. Borrowers can remain in the home without making monthly mortgage payments, as long as they adhere to the loan requirements: Occupy the home as the primary residence, maintain the property, and remain current on the property taxes, homeowners insurance and HOA dues.
Home Equity Conversion Mortgages can also be used to purchase a new home without the obligation of monthly mortgage payments. You remain the homeowner with the HECM for purchase, so you must continue to pay property taxes and insurance on the home as well as maintain it.