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Home Equity Conversion Mortgage (HECM) Information

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Home Equity Conversion Mortgage (HECM) Calculator

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Eligibility Calculator




As a top Home Equity Conversion Mortgage (also known as a HECM or Reverse Mortgage) lender, we think homeowners deserve more. So at Reverse Mortgage Funding LLC (RMF), we’re serving our customers by applying our fresh perspective. By working to make HECMs better, we’ve made them a better choice for you.



It’s a versatile home equity loan created specifically for older homeowners and homebuyers, allowing them to turn part of the equity they’ve built up in their home into funds they can use as they choose.

It’s a lot like a mortgage you’d get from a bank or credit union (in fact, many of them offer reverse mortgages). However, there are key differences that make reverse mortgages better suited for people who are retired or looking ahead to retirement.

Most Home Equity Conversion Mortgages (HECMs) are FHA-insured*. The typical HECM candidate is at least 62 years old, has 50% or greater equity in their home, and wants to:
  • Reduce or eliminate monthly mortgage payments. As with any mortgage, you must meet your loan obligations: keeping current with property taxes, homeowners insurance and keeping your home in good condition (or good shape).
  • Consolidate other debt, such as credit card balances
  • Make home improvements
  • Establish a line of credit to be available for unplanned expenses
  • Reduce or eliminate monthly mortgage payments. As with any mortgage, you must meet your loan obligations: keeping current with property taxes, homeowners insurance and keeping your home in good condition (or good shape).
  • Consolidate other debt, such as credit card balances
  • Make home improvements
  • Establish a line of credit to be available for unplanned expenses
In addition to HECMs, some lenders have also introduced proprietary loan products to accommodate a broader array of borrowers. For example, Reverse Mortgage Funding LLC (RMF) offers Equity Elite, which is available to those as young as 60 and designed specifically for higher-value homes, condominiums, and borrowers who want low up-front costs.1
  • All borrowers on the home’s title must be at least 62 years old or 60 years old in some states with our Equity Elite product. The older you are, the more funds you can receive from a Home Equity Conversion Mortgage (HECM) reverse mortgage.
  • You must live in your home as your primary residence for the life of the HECM. Vacation homes or rental properties are not eligible.
  • You must own your home outright or have at least 50% equity in your home. Even if you owe some money on your existing mortgage, you may be eligible for a HECM reverse mortgage. The funds from the reverse mortgage would first pay off your mortgage and satisfy any other eligible existing liens before you could use the funds for other things. Refinancing existing debt(s) with a reverse mortgage can help improve monthly cash flow.
  • You must meet with a Department of Housing and Urban Development (HUD)-approved reverse mortgage counselor prior to applying for a HECM. The reverse mortgage counselor will discuss how a HECMs works and the associated costs. The goal of the counseling session is to make sure that potential borrowers fully understand and are comfortable with the process and the loan terms.

  • Lump Sum – A lump sum of cash at closing. (Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages)
  • Tenure – Equal monthly payments as long as the homeowner lives in the home
  • Term – Equal monthly payments for a fixed period of time
  • Line of Credit – Borrowers can draw any amount at any time until the line of credit is exhausted
  • Any combination of those listed above
Except for a fee for required HECM counseling, most of the fees can be financed with your loan, so out-of-pocket costs are minimal.

The costs are added to the loan amount (“principal”) and paid along with the accrued interest when the loan becomes due. Depending on the loan option chosen, there may be an origination fee, closing costs, a mortgage insurance premium (required for HECM loans) and a monthly servicing fee. However, there are also options (such as Equity Elite) that eliminate nearly all up-front costs.1 We will let you know exactly what costs are involved.
It must be repaid when the last surviving borrower sells the home, moves out, or passes away. Typically, the home is sold to repay the loan, and the homeowner or their heirs keep any remaining equity. If the homeowner or family members wish to keep the property, the loan can be repaid any time using a traditional mortgage or other funds.  As with any mortgage, you must meet your loan obligations: keeping current with property taxes, homeowners insurance and keeping your home in good condition (or good shape).
It is extremely important to RMF and the entire HECM industry that borrowers and their families understand their obligations. As with any mortgage, the borrower has certain obligations under the loan:
 
  • Keep the home in good condition
  • Keep current with property taxes and insurance
  • And with a HECM, the borrower(s) must live in the home as the primary residence (there is an annual certification)
The details of the borrower obligations are discussed during the independent counseling session, and a counseling certificate is not issued until the counselor certifies the prospective borrower’s understanding of the loan terms and conditions. Failure to meet loan obligations can lead to the loan becoming due and payable.
Yes, with the HECM for purchase loan, qualified borrowers can use their loan proceeds to buy a home that better suits their needs and lifestyle. It’s a home financing option that can make it easier for buyers age 602;and older to afford the home they want, while preserving more of their savings
 
  • With a traditional home equity loan or home equity line of credit, you must make monthly principal and interest payments on the balance while you live in the home — whereas a HECM has a flexible repayment feature. You can pay as much or as little as you like each month toward principal and interest, or make no monthly loan payment at all. Your HECM balance, including accrued interest and fees, does not have to be repaid until you pass away or move out, and as with any mortgage, you must meet your loan obligations: keeping current with property taxes, homeowners insurance and keeping your home in good condition (or good shape).
  • If part of your loan is held in a line of credit upon which you may draw, then the unused portion of the line of credit will grow in size each month — giving you access to more available funds as time goes on. The growth rate is equal to the sum of the interest rate plus the annual mortgage insurance premium rate being charged on your loan.
  • And the lender cannot “freeze” or reduce the line of credit, as long as you fulfill your loan obligations — so it will be there if and when you need it.
No. This is the #1 misconception. In fact, as with any mortgage, the borrower holds the title to the home.

A HECM is a lot like a traditional mortgage, with an important distinction: a flexible repayment feature that allows the borrower to make any size monthly mortgage payment, or even none at all. As with any mortgage, the borrower must meet their loan obligations, keeping current with property taxes, insurance and maintenance.
Recent product advances have made HECMs more attractive, and academic researchers and financial advisors have developed effective strategies for using a HECM as part of an overall retirement plan. Just as there are loans specifically for students and for first-time homebuyers, a reverse mortgage is another type of “life stage” loan.

Increasing longevity and rising healthcare costs have also changed the retirement landscape. The ability to access home equity through a HECM can provide tremendous peace of mind to live safely and comfortably as long as possible.
For most people, a mortgage is the biggest financial commitment they’ll ever make. So it’s important to do your homework and find a lender that makes you feel informed, confident and comfortable in your decision-making.

Asking probing questions—and hearing straightforward, honest answers—will help your family feel you’re heading down the right path in securing a comfortable retirement for your parents or loved ones. If you work with a financial advisor, bring them into the process. RMF is a good place to start as we are the #1 Ginnie Mae loan issuer, have an A+ rating with the better business bureau, rated #1 in Customer Statisfaction by LendingTree, and 5 star "excellent" customer rating on TrustPilot.



HECM Loan Calculator





HOW IT WORKS

Step One

We evaluate if you are eligible for a reverse mortgage loan using three variables:

Home Owner's Age

To qualify for a HECM, you must be over age 62 on the loan’s closing date (or age 602 for Equity Elite). The older you are, the more funds are available to you.

Home Value

This is the amount that your home is worth. If you’re not sure, type in your best estimate.

Mortgage Balance

This is the amount that you have left to repay in mortgages and liens on your home. The less money you owe, the more of your home’s equity is available for you to access.

Step Two

We look at property information to give you an estimated amount of what you may be eligible to receive.

The amount that is available generally depends on four factors: your age, the current interest rate, the appraised value of the home, and government-imposed lending limits.

COMPLETE FIELDS BELOW



By clicking "CALCULATE YOUR ELIGIBILITY", you are providing your signature and express "written" consent to be contacted by or behalf of Reverse Mortgage Funding LLC, its affiliates and/or its agents (collectively Company) at the telephone, email or mailing address that you have provided for purposes of fulfilling this inquiry about reverse mortgages and/or the Company's products or services, even if you have previously registered on a "do not call" government registry or requested Company to not send marketing information to you by email and/or direct mail. You agree that the Company may use automatic telephone dialing systems and prerecorded voice messaging in connection with calls or texts made to the telephone number you provide even if the telephone number is assigned to a cellular or mobile telephone service or other service for which the called party is charged. You understand that you are not required to consent to receiving autodialed calls or texts as a condition of any reverse mortgage and/or purchasing any Company products or services. If you do not wish to authorize Company to contact you in this manner, you can call 888-277-3617 to complete your request. You understand that you can revoke this consent at any time.

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HECM Pros and Cons

PROS of a HECM

  • It’s a loan option that can help make it easier for homeowners and homebuyers age 60 and older to live a more comfortable retirement.
  • You continue to live in your home and retain title to it. As with any mortgage, you must meet your loan obligations, keep current with property taxes, insurance and maintenance. 
  • You can choose to take your funds as a lump sum; line of credit that you can tap as needed; a steady stream of monthly advances for a set period of time, or as long as you live in the home; or a combination of these options. Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages.
  • The funds from your HECM loan can be used to pay off the existing mortgage on your home. While there will still be a lien on your home for the outstanding amount of the reverse mortgage, you are not required to make monthly principal and interest payments on the reverse mortgage, so you will be freed from the monthly mortgage payment expense. As with any mortgage, you must meet your loan obligations, keep current with property taxes, insurance and maintenance. 
  • No monthly mortgage payments are required for as long as you live in the home and continue to meet your obligations to pay your property taxes and homeowners insurance and maintain the property. As with any mortgage, you must meet your loan obligations, keep current with property taxes, insurance and maintenance. 
  • Closing costs and ongoing fees, such as the Federal Housing Administration (FHA) Mortgage Insurance Premium (MIP), can be financed with the reverse mortgage loan — so out-of-pocket expenses can be minimal.
  • Loan proceeds are generally not considered taxable income. (Not tax advice; consult a tax professional.)
  • Generally, a HECM loan will not affect Social Security or Medicare benefits. However, you may wish to consult a financial professional to determine the potential financial implications of obtaining a reverse mortgage loan. The funds from a reverse mortgage generally do not affect regular Social Security. However, needs-based benefits, such as Supplemental Security Income (SSI), may be impacted. Consult a financial professional or government benefits specialist about your particular situation. Visit www.ssa.gov.
  • A HECM loan is a non-recourse loan. This means that neither you nor your heirs are personally liable for any amount of the mortgage that exceeds the value of your home when the loan is repaid.
  • If your home increases in value in the future, you may consider refinancing your HECM access even more loan proceeds.
  • After the loan is repaid, any remaining equity belongs to you or your heirs.
If you’re a homeowner who’s at least 60 years old, with equity in your home, you may be eligible for this financial solution. See if you qualify with our free instant HECM loan calculator!

CHECK ELIGIBILITY

CONS of a HECM

  • The loan balance increases over time as interest on the loan and fees accumulate.
  • As home equity is used, fewer assets are available to leave to your heirs. You can still leave the home to your heirs, but they will have to repay the loan balance. Usually, the loan is paid off by selling the home. However, this can be done using other funds or by refinancing through a traditional mortgage.
  • Fees may be higher than with a traditional mortgage. (Ask us about our lower-cost options.)
  • Eligibility for needs-based government programs, such as Medicaid or Supplemental Security Income (SSI), may be affected. Consult a benefits specialist.
  • A HECM loan becomes due and must be repaid when a “maturity event” occurs, such as the last surviving borrower (or, in the case of a HECM, non-borrowing spouse meeting certain conditions) passes away, the home is no longer the borrower’s principal residence, or the borrower vacates the property for more than 12 months for medical reason or 6 months for non-medical reason (see CFPB guidance.) The loan will also become due if the homeowner fails to meet other loan obligations, which include paying their property taxes, insurance, homeowners association fees, and maintaining the property.

Still have questions? Call today: 888-277-3617

* This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency.

1With this pricing option, borrower receives a lender credit covering nearly all closing costs. There is a non-refundable independent counseling fee of approximately $125 on average, which the borrower pays directly to the counseling agency. Terms and conditions apply. Not available in all states

2Not applicable in all states; some states may impose a higher age requirement. Visit www.reversefunding.com/equity-elite for details.