1. Age Requirement:

   • To qualify for a HECM, homeowners must be at least 62 years old. The older the homeowner, the more funds they may be eligible to receive.

2. No Monthly Mortgage Payments:

   • One of the primary advantages of a HECM is that borrowers are not required to make monthly mortgage payments. The loan is typically repaid when the home is sold.

3. Loan Repayment:

   • The loan is repaid through the sale of the home. If the homeowner or heirs wish to keep the home, they can repay the loan using other funds, capped at the home's appraised value.

4. Federally Insured:

   • HECM loans are insured by the FHA, providing an additional layer of protection for borrowers.

5. Flexible Disbursement Options:

   • Borrowers can choose how to receive funds, including a lump sum, monthly payments, a line of credit, or a combination of these options.

6. No Income or Credit Score Requirements:

   • HECM loans do not have specific income or credit score requirements. Eligibility is primarily based on age, home value, and equity.

7. Financial Counseling Requirement:

   • Before obtaining a HECM, borrowers are required to undergo financial counseling to ensure they understand the terms and implications of the reverse mortgage.

How HECM Works:

1. Initial Conversation

   • Determine your eligibility for HECM through an FHA-approved lender. They will asses your qualifications and prepare a proposal for you to review to see if the options make sense to you and your family.

2. Financial Counseling:

   • Borrowers undergo mandatory financial counseling to ensure they fully understand the terms of the HECM.

3. Loan Application:

   • Homeowners apply for a HECM through an FHA-approved lender.

4. Home Appraisal:

   • The lender orders an appraisal to determine the home's current value, influencing the loan amount.

5. Loan Approval:

   • Once approved, the homeowner chooses the disbursement option that best suits their needs.

6. Receiving Funds:

   • The homeowner receives funds based on the chosen disbursement option. No monthly mortgage payments are required.

7. Loan Repayment:

   • The loan becomes due when the homeowner sells the home, moves out, or passes away. The home is typically sold to repay the loan.

8. Remaining Equity:

   • If there is remaining equity after repaying the loan, it goes to the homeowner or their heirs.

Considerations and Tips:

• Understand Costs and Fees:

  • HECMs come with various costs and fees, including closing costs and insurance premiums. It's essential to understand these upfront.

• Impact on Equity:

  • Using a HECM reduces the amount of equity available to the homeowner or heirs when the home is sold.

• Ongoing Dream-Homeownership Responsibilities:

  • The homeowner remains responsible for property taxes, homeowners insurance, and maintenance of the home.

• Financial Planning:

  • Consider how a HECM fits into long-term financial plans, and discuss the decision with family members or financial advisors.