How The HECM Program Works



“A no monthly mortgage payment*, home loan for seniors.” 

Get an estimate of how much of a down payment you may need by using this calculator.

The basics explained:  A mortgage is a mortgage is a mortgage.  Traditionally a person buys a house, finances it, makes payments, and pays their property taxes as well as their homeowners insurance.  They can sell the house at any time and pay back the lender.  As the owner (with a lien, of course), one can modify the house, paint the walls odd colors, install funky carpet, and maybe even add a swimming pool.  A HECM is no different, except their monthly mortgage payments are optional and at least one borrower must be age 62.* It’s that simple!

*(On Aug 4th, 2014 a HUD rule went into effect (Mortgagee Letter 2014-07) – now all spouses (age 18+) will have their tenure protected. If the spouse is age 62 or older, they are co-borrowers, and if they are younger than 62 (but age 18+) they would be considered a Non-Borrowing Spouse. The Non-Borrowing Spouse (NBS) will have protected tenure. This HUD 2014 rule does not protect the tenure of dependent children residing in the house, or spouses who marry HECM borrowers after the loan is taken out. NOTE: Borrowers are still responsible for paying property taxes and homeowner’s insurance, maintaining the home, and otherwise complying with the loan terms.

To qualify:  The lender (per FHA) doesn’t require monthly mortgage payments, just a financial assessment is required (rather than credit score) to determine eligibility.  Borrowers need sufficient down payment funds, this is about 60% of the purchase price (or less) depending on the age of the youngest borrower. One must pay the property taxes and insurance, maintain the home, and otherwise comply with loan terms.

To get an estimate of how much of a down payment you may need, try out this calculator or contact us directly.

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