About The HECM

The Home Equity Conversion Mortgage (HECM) is a federally insured Reverse Mortgage. It is only available to homeowners who are at least 62 years of age. The HECM program was signed into law by Ronald Reagan as a national program in 1988; and since its inception has helped hundreds of thousands of homeowners safely access the equity in their homes, helping them better enjoy their retirement years.

The original mission of the HECM Reverse Mortgage was to help older Americans remain in their homes for the duration of their lifetime. Over time, it became clear that the program needed to expand its mission to provide additional benefits for the homeowner and their heirs. On October 1, 2013, the HECM REVERSE MORTGAGE underwent a complete transformation to address issues that had sometimes dwarfed its benefits.

  • Homeowners now receive increased HECM product options which preserve their home equity for themselves and their heirs for a longer period of time.
  • Loan costs are reduced when homeowners use less of their available equity during the first year of having their HECM REVERSE MORTGAGE.
  • Much older Americans (in their late 80’s and 90’s) are able to use a larger portion of their home equity than the Baby Boomers just hitting their 60’s.
  • Younger spouses (not 62 at the time of the reverse mortgage) can receive a benefit if their life partner passes first. Provided that they meet eligibility standards, the younger spouse may remain in the home with the REVERSE MORTGAGE and not have any mortgage payments to pay until they die or permanently move out.
  • Wealthier homeowners, with advice from financial advisors – now on the REVERSE MORTGAGE bandwagon – are using a HECM Line of Credit (LOC) as a financial planning tool to extend the life of all of their assets.

 

   DISCOVER HOW A HECM MIGHT FIT IN YOUR FINANCIAL PLAN   

 

 

WHO ARE THE PEOPLE THAT USE REVERSE MORTGAGES?

We generally find there are two groups of homeowners using the HECM – each having differing views on HOME – MONEY – FAMILY!

See where you see yourself or a family member –

A HECM Reverse Mortgage might provide a better retirement lifestyle

ALMOST & JUST RETIRED – The Baby Boomers

(10,000 Boomers are turning 62 every single day! Generally healthy and feeling invincible)

HOW THEY FEEL ABOUT THEIR HOME

  1. May want to buy a new forever home – maybe the “dream home” they’ve always wanted
  2. Might want to remodel their current home to age-in-place
  3. View home as a way to finance other investments and use a HECM to do that

MONEY ISSUES AND THEIR DESIRES FOR THE FUTURE

  1. Want to improve cash flow for fun and future
  2. Desire to replenish assets due to recent investment losses
  3. Would use a HECM to prevent untimely principle withdrawal from investment portfolio
  4. Some would take a HECM so they can postpone taking social security until higher payout available

THEIR FAMILY CONSIDERATIONS – Variety of thoughts

  1. Would use cash equity from a HECM to help family members
  2. A HECM would keep them independent; so their family wouldn’t have to help them
  3. Attitude about inheritance issues: “We worked to grow our Home Equity and its ours to use – our kids have a lifetime to prepare for retirement”

 

 

GOLDEN YEARS – Older Generation (80+)

(Want to BOTH remain independent AND preserve their children’s inheritance)

 

 

 

HOW THEY FEEL ABOUT THEIR HOME

  1. Use HECM sparingly so as to preserve equity to pass to their heirs
  2. Sell old family home, save most of the cash proceeds to pass to their heirs, and buy a much smaller home using a HECM Reverse Mortgage
  3. Couples use a HECM to keep one in the family home if the other has to go to a nursing home

 

MONEY ISSUES AND THEIR DESIRES FOR THE FUTURE

  1. Want to stretch remaining assets in order to remain independent in current home
  2. Use Cash from HECM to meet current expenses, including in-home care
  3. Would keep HECM only for emergencies and try to preserve as much equity as possible for the heirs

 

FAMILY CONSIDERATIONS WHEN GETTING A HECM REVERSE MORTGAGE

  1. Some would rather sacrifice a better lifestyle for themselves in order to preserve
    home equity for their heirs
  2. Some will feel guilty that they are spending their adult children’s inheritance
  3. When they agree to a HECM they want permission from their heirs

 

   HOW DO THE ADULT FEEL ABOUT THE HECM FOR THEIR PARENTS?   

 

 

HOW DO THE ADULT CHILDREN FEEL ABOUT THE HECM FOR THEIR PARENTS?
With stories of elder abuse and over aggressive sales people we all have to watch out for our moms, dads and grandparents as they get older. Many families make it a practice to discuss any large purchase, investment or loan so nobody takes advantage of their parents or grandparents. They feel that everything should be done to preserve the longevity of assets so their loved ones are able to live comfortably in the home of their choice. We agree completely!

As one considers a HECM Reverse Mortgage, which is a valuable financial tool, we recommend that family members learn and discuss the possible benefits among themselves and with a trusted advisor, including their reverse mortgage specialist.

 

 

ADVICE FOR FAMILY MEMBERS

WHEN YOU CALL – WHAT YOU GET

  • Personal attention and all your questions answered
  • Learn how much you are eligible to receive
  • Written proposal describing your individually designed HECM plans – you’ll have several choices
  • Learn how you may be able to receive future cash benefits based on a “growth rate” applied to some HECM plans
  • A list of Counselors to provide the required third party counseling
  • Minimized loan costs
  • No Consultation or Application Fees