H.E.C.M stands for: Home Equity Conversion Mortgage.
The H.E.C.M. is the ONLY reverse mortgage insured by the federal government. H.E.C.M. loans are insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD).
The FHA tells HECM lenders how much tax-free money they can lend you, based on your age, home value and current interest rates. The H.E.C.M program limits your loan costs, and the FHA guarantees that the lender will meet their obligations to you. H.E.C.M. loans are the lowest-cost multipurpose reverse mortgage available, and in most cases they provide the largest total cash benefits, as well.
A significant feature of the HECM is that it is insured by the government’s FHA insurance program.
This program ensures that you will receive all payments due to you as long as you live. It, also, ensures that the lender will receive full repayment of your loan balance, even if it exceeds the value of your home. This means that you cannot be forced to sell or vacate your home, even if the loan balance exceeds the value of your home. In addition, as a H.E.C.M. borrower, neither you, your heirs, nor your estate will ever owe more than your loan balance or the value of your property (whichever is lower) and no assets other than your home must be used to repay your debt, because, the FHA insurance covers any further financial obligation to the lender.
Another advantage to the H.C.E.M. is that you are guaranteed to retain ownership of your home for life.
Title remains in your name or the name of your Living Trust. You may sell, move, or repay your H.E.C.M. at any time you wish with no prepayment penalties.
Your spouse will not be forced to move, sell, or repay the H.E.C.M. loan. The H.E.C.M. becomes due and payable after the death of the last surviving borrower. After your demise, your spouse or Living Trust will remain owner of your home for as long as your spouse continues living in your home.
Your heirs will inherit your home. How they choose to repay the loan is up to them. Once the H.E.C.M. has been repaid, the lender retains no further claims. Any remaining equity, along with your home’s appreciation, will pass on to your heirs according to the terms of your will or Living Trust.
In the unlikely event that your home’s value falls below the amount owed on your H.E.C.M.; you, your heirs and your estate are protected by the Federal Government’s FHA insurance program. Neither you, your heirs nor your estate will ever owe more than your home’s value.
|
