What is a reverse mortgage (HECM)?

A reverse mortgage is a loan for homeowners 62 or older that allows them to access the equity in their home without having to make monthly mortgage payments. Unlike a traditional mortgage, where you pay down the loan balance over time, with a reverse mortgage, the loan balance increases.

How do reverse mortgages work?

Instead of making monthly mortgage payments, you receive funds from the reverse mortgage lender, which can be in a lump sum, monthly advances, or a line of credit. The borrowed funds, along with interest and fees, are added to your loan balance each month.

Who qualifies for a reverse mortgage?

To qualify for a HECM reverse mortgage, you must be 62 years or older, own your home outright or have a significant amount of equity in it, and live in the home as your primary residence. You will also need to undergo mandatory counseling from a HUD-approved agency to ensure you understand the implications of a reverse mortgage.

Are there closing costs associated with a reverse mortgage?

Yes, there are closing costs associated with a reverse mortgage, similar to a traditional mortgage. These costs can include origination fees, servicing fees, and third-party charges.