HECM, is this the best reverse mortgage

HECM, is this the best reverse mortgage. Growing old is not easy. Growing old without money is no fun at all. You need to think about medical expenses, transportation, besides the everyday expenses you have always had. However when you retire your income tends to drop, making ends meet even more of a challenge. If you have been unable to save for your retirement it can be a struggle just to pay basic expenses, without even thinking about travelling, hobbies or presents for the grandchildren.

The irony is that many people in retirement, or retirement age that are trying hard just to survive are sitting on a large amount of money that’s doing nothing, the equity of their home. In many occasions the house is paid for or only a small percentage left to finish paying the mortgage. The problem is that people often don’t want to move from the home they have grown accustomed and love. Especially if buying another home would be hard, and living with family is something they would prefer to avoid unless completely necessary.

The answer? Reverse mortgages.

What are reverse mortgages?

Reverse mortgages are a special type of mortgages that gives you money in either a lump sum or through monthly payments. Nothing different there, the twist is that you don’t have to pay back until you either sell your house or die. Whatever happens first.

The advantages for senior citizens are obvious. They can enjoy life a little more, pay for medical bill or just treat their family from time to time without having to lose their home. The family can even keep the home if they pay the mortgage or refinance the home once the owners die. The question now is which type of reverse mortgage is best for you?

As usual, nobody can do all your homework for you, although we can help. It is always a good idea to talk to a financial adviser before making any big financial decisions, especially when it’s to do with home loans. In this article we will analyze a popular type of reverse mortgage, HECM.

HECM, what the heck is that about?

HECM, stands for Home equity conversion mortgage. It is a popular form of reverse mortgage and is the only one insured by the United States Federal government, which makes it an attractive option. Reverse mortgages are complex financial products it is advisable to look for an HECM advisor to explain all the details.  However the main factors of HECM reverse mortgages are as follow. They are for home owners that are 62 and over that live in their home. You don’t need any credit history or specific score or any other financial collateral to the loan except of course the house. No payments are made towards the loan until the owner dies or no longer lives in the house. The amount of the mortgage is based on either the value of the house or the maximum HECM mortgage amount, whichever amount is smaller.

Is HECM the best reverse mortgage? It very well might be. Check out more details with the U.S Department of Housing or your local equivalent for more information.