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Specifically designed for homeowners 62 and older, a Home Equity Conversion Mortgage (HECM) is a type of reverse mortgage that allows borrowers to convert a portion of the equity they have in their home into cash.

HECMs are the most common type of reverse mortgage and the only reverse mortgage insured by the Federal Housing Administration (FHA). Only FHA-approved lenders like Fairway can provide them.

How Does a HECM Work?

The lender pays off the remaining balance of your existing mortgage (if there is one) and the rest of the money is available for you to use. Choose to pay as much or as little of the loan balance as you would like or make no payment at all. The FHA guarantees that if the loan terms are met (homeowners are still responsible for taxes, homeowners’ insurance, and property maintenance) no repayment of the loan is required until the last borrower moves or passes away.

HECM for Purchases

A HECM can also be used to buy a new home. A Home Equity Conversion Mortgage for Purchase (H4P) is a Federal Housing Administration (FHA) insured home loan that is designed to help homebuyers age 62+ to buy a new home that better meets their current lifestyle. Using proceeds from the HECM, you have the option to pay as much or as little of the loan balance each month (or make no payment at all), increasing your purchasing power, freeing up cash, and extending the life of your productive retirement assets.

HECM Benefits

Helping seniors in or near retirement.

  • No monthly mortgage payments except for taxes, insurance, and maintenance.
  • Growing line of credit (applies to unused funds).
  • Increased discretionary cash flow.
  • Can sell your home at any time.
  • Does not require payment until last living borrower permanently leaves the home.
  • Bridge the Medicare gap.
  • Increase your purchasing power.

HECM Requirements

According to HUD.gov, HECM borrowers must:

  • Be age 62 or older.
  • Have full ownership of significant equity in your home.
  • Occupy the property as your principal residence.
  • Meet credit and property requirements.
  • Receive reverse mortgage counseling from a HUD approved counseling agency.
  • Be current on any federal debt.
  • Continue to pay taxes, insurance, and maintenance.
  • The property must be a single-family home, a 2 to a 4-unit dwelling or FHA-approved condo’
  • HUD counseling is required.

Start with Fairway of the Rockies

Fairway of Rockies serves Rocky Mountain seniors with HECM loans as a much-needed supplement to their retirement plan. Start the discussion with friendly professionals you can count on. Get in touch by filling our quick pre-qualification form.