Definition

• Home Equity Conversion Mortgages (HECM) allowing homeowners aged 62 and over to access home equity.

Ideal Borrowers

• Homeowners aged 62 and over looking to tap into home equity without immediate repayment.

Down Payment

• Not applicable as it’s based on home equity access.

Benefits

• Allows homeowners aged 62 and over to access home equity.
• Deferred payment until specific events occur.
• No required monthly mortgage payments.
• Various disbursement options (equal monthly payments, line of credit, lump sum).

Usage Limit

• Limited to home equity and specific age criteria.

Strengths

• Specifically designed for homeowners aged 62 and over.
• Allows access to a portion of home equity without monthly mortgage payments.
• Deferred payment until the homeowner sells the home, moves out, passes away, or fails to comply with loan terms.
• Various disbursement options, including equal monthly payments, a line of credit, and lump-sum disbursement.
• Useful for seniors wanting to tap into home equity without increasing monthly expenses.

Considerations

• Eligibility requires all borrowers on title to be 62 years or older.
• Financial eligibility criteria set by HUD.
• Property must meet FHA minimum standards.
• Larger closing costs, potentially up to 5% of the home’s value.
• Loan balance increases over time, impacting potential inheritors.
• Risks include foreclosure if loan terms are not complied with.
• Requires careful consideration of how much equity to access to avoid overextending or underutilizing the loan.