What is a HECM?

HECM stands for Home Equity Conversion Mortgage, a type of reverse mortgage governed and insured by the Federal Housing Administration. Most reverse mortgages taken out today are HECMs.

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Are there any age restrictions for a Reverse Mortgage?

You must be at least 62 years of age.

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Can I take out a reverse mortgage if I already have a mortgage?

Yes, as long as you qualify. Remember, the more equity in your home the more you could be eligible for in a reverse mortgage. Any mortgages and/or liens on the property must be paid with the reverse mortgage.

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If I have poor credit or no income can I still qualify?

Your credit and income is not a factor in deciding if you are eligible.

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Does the IRS consider the monthly advances from a reverse mortgage as “income”? 

No. The cash advances are actually “loan distributions” and are not considered income.

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How does a reverse mortgage differ from a home equity loan or line of credit?

The major difference is that there is NO mortgage payment required with a reverse mortgage. Also, with a traditional home equity loan or line of credit there are credit and income requirements to qualify.

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My spouse is permanently in a nursing home. Can we participate?

Yes. This program only requires that one owner occupies the property as their principal residence.

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Are there restrictions on how I can use the money? 

No, of course not. After all – it's your money.

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What happens if my spouse passes away? 

The reverse mortgage does not become due until the last remaining borrower passes, moves, or sells. A spouse could outlive the other by 20 years and the loan still does not become due, as long as they remain living in their primary residence.

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Can the lender take my home away if I outlive my funds? 

No! Nor, is the loan due. You do not need to repay the loan as long as you, or one of the borrowers, continues to live in the home and keeps the taxes and insurance current. You can never owe more than your home's value.

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How does this affect my heirs? 

This is a great way to share your wealth with your children while you are still alive.

When you sell your home, or no longer use it as your primary residence, you (or your estate) will have to repay the loan, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or your heirs.

None of your other assets will be affected by the reverse mortgage. Your heirs will be able to choose whether to keep the home or sell it. If they decide to keep the home, they must pay the balance due on the reverse mortgage. Otherwise, they may sell the home and use the proceeds to pay off the remaining mortgage – and keep any excess proceeds from the sale of the home.

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I live in a condo, am I eligible?

Yes, as long as the condominium association meets HUD guidelines either by being already approved with HUD or completing a condo affidavit that satisfies HUD.

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Are “manufactured homes" eligible?


Yes. The home must have been built in 1977 or later, and have a permanent foundation that is approved by FHA.

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My home is held in a life-estate. Do I qualify?

Yes, however any remaindermen, often the children, must sign the mortgage and right-to-cancel at closing.

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When is a reverse mortgage not right for me? 

If you have low home equity, generally less than 30%, you may not qualify for a reverse mortgage.

Also, anyone looking to sell or move within a short period of time, generally less than 2-3 years, should reconsider because of the shorter period of time to recover the costs of obtaining a reverse mortgage. In short, the longer you occupy the home as your primary residence, the more years the costs can be spread out over, thus lower the cost of a reverse mortgage on an annual basis.

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Isn’t less expensive to move to a smaller home?

In most instances, after the costs are added up, its often more expensive to move into a smaller home. The costs can include the realtor’s commission, usually between 4%-6% of the selling price, the moving expenses, the costs associated with the purchase of a new home, including closing costs, add them all up and you’ll find that a reverse mortgage is less expensive. Most importantly, a reverse mortgage will allow you to stay in your home – you don’t have to move.

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