A Home Equity Conversion Mortgage is just another way of saying reverse mortgage. The major difference between the HECM program and a reverse mortgage is the HECM program is insured by the Federal Housing Administration. One Reverse Mortgage offers the HECM program which means that the reverse mortgages we offer are insured by the FHA. Reverse mortgages insured by the FHA are more secure than the reverse mortgages not insured by the FHA.
So would a HECM work for you? Here are some important things to know about the HECM.
The money you receive is based on a few things
The amount of money you can qualify for will be based on a few things. Those things include the value of your home, your age, and the maximum amount on the reverse mortgage. The FHA puts a limit for reverse mortgage loans which is $625,500. The cap is in place because the FHA funds the program. A reverse mortgage is a non-recourse loan which means when you sell your home and you end up owing more than your home is worth the difference is covered by the FHA, which is why a cap had to be in place.
The process is simple
The process at One Reverse Mortgage is 5 easy steps:
- Learn about the reverse mortgage program and apply.
- Receive and complete your reverse mortgage application and attend counseling.
- Closing and disbursement
Those are the steps in the reverse mortgage process. Your licensed will be with you every step of the process to assist you and answer any questions you may have. Remember that step 5 only happens when you vacate the home permanently. To learn more about the process check out our reverse mortgage process page.
No monthly mortgage payments
One of the most important benefits for people 62 and older who choose to take out a reverse mortgage is the elimination of their current monthly mortgage payment*. If you owe anything on your current mortgage, the reverse mortgage pays off that loan and if there are any proceeds left after it’s paid you receive tax-free** cash. For people 62 and older living on a fixed income, eliminating that monthly financial burden can be life changing. However, you are still required to maintain the home and remain current on taxes and insurances.
You still own your home
The most common misconception with a reverse mortgage is that the bank is now the owner of your home. That is simply not true. Title on a reverse mortgage is no different than any other mortgage you’ve ever had – only the homeowners are on the title***.
Does not affect your Social Security
The proceeds from a reverse mortgage do not affect your Social Security****, Medicare or pension benefits. However, if you are on Medicaid, any reverse mortgage proceeds that you receive must be used immediately. Funds that you retain would count as an asset and could impact Medicaid eligibility. We recommend that you consult your financial advisor to get a complete understanding of a reverse mortgage and your benefits.
*Homeowner is still responsible for taxes, insurance, and property maintenance.
**Please consult with your financial advisor.
***You remain responsible for counseling costs, taxes, insurance and maintenance expenses.
****May affect SSI or Medicaid. Please consult with your financial advisor.