In general, a "Reverse Mortgage" is a loan taken against your home that you are not required to pay back until you sell your home, move out of the home permanently, or the last surviving borrower passes away. A Home Equity Conversion Mortgage (HECM) is a type of reverse mortgage loan, the difference being that a HECM loan is insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD). Since HECM loans are supported by the federal government, the costs and fees associated with the loan are limited and the borrower is assured that the lender will meet their obligations. Also, HECM loans usually have lower interest rates, provide the highest loan advances, and generally cost less than other types of reverse mortgages.
The funds obtained from a Reverse Mortgage are typically used to:
The objectives of the session are to educate you about the implications of a Reverse Mortgage - how they work, and the possible alternatives. Your counselor will discuss your needs and circumstances, your responsibilities, the associated costs of a Reverse Mortgage, the tax implications, and provide you with the guidance and resources you need to make an informed decision.