Are you an older citizen who is looking for greater financial security? The HECM for Purchase Reverse Mortgage may be just the thing you’ve been looking for. HECM stands for “Home Equity Conversion Mortgage” and is a reverse mortgage program sponsored by the Federal Housing Administration. The program is geared towards older adults and provides for a safe plan that heightens financial security among the elderly population. If you’ve ever considered a reverse mortgage, but weren’t quite sure where to start, here is some basic information that will help you determine if the HECM plan is right for you.
What is HECM for Purchase?
For those of you who may not be too familiar with reverse mortgages, the concept is quite simple – essentially, a reverse mortgage is a unique type of home loan that lets you take part of your equity and convert it into cash. The equity that accumulates over years and years of making mortgage payments can actually be paid out to you in a lump sum. The Home Equity Conversion Mortgage is unique in the fact that borrowers do not have to worry about repayment of the loan until they no longer meet the obligations set forth by the loan or no longer use their home as their primary residence.
Purpose of the Program
The program was initially designed as a financial safeguard for elderly Americans. There are a number of seniors who use the funds from this program as a means of Social Security allotment or to pay existing medical expenses or fund necessary home improvements. The program was designed to allow elderly residents to purchase a new home and obtain a reverse mortgage all at the same time –all in one transaction. This allows elderly citizens to more easily relocate to be closer to friends and family members or downsize their homes to better cater to their aging needs.
Benefits
A HECM for purchase reverse mortgage has a number of unique advantages as compared to traditional home equity loans or second mortgages. For one, an HECM loan requires no monthly payments – so borrowers do not have to worry about remembering to pay a set fee on a specific date each month. HECM reverse mortgages also have no pre-established maturity date, as compared to some of their counterparts. HECM reverse mortgages are also “non-recourse” loans, meaning that borrowers and their heirs are not responsible for any balance that exceeds the cost of the home at the time the home is sold to pay back the loan. This presents a unique advantage for homeowners, as they never have to worry about being stuck with payments they cannot afford or be put into a rather risky financial situation later in life.
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