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Truth and Myths about HECM Mortgages

Offering senior homeowners ways to convert their home equity into useable cash.

Home Equity Conversion Mortgages are such an unfamiliar, peculiar idea that perhaps we should have expected that not everyone knows all the details about them. There are many misconceptions around about HCEM's and how they work - we need to set the record straight with important and useful information.

Among the bad information:

Homeowners will lose their houses.  Greedy bankers will become the new owners. FALSE! 

Truth:  Homeowners will continue owning their houses.  You will always retain title to your home; you will simply have a mortgage lien on the property just like you do know if you have a regular mortgage.

Grandma and Grandpa will get kicked out into the street.  FALSE!

Truth: Homeowners can remain in their houses for as long as they live there, pay their property taxes and home insurance and keep up the place.

The lenders 'get' not only the house, but everything else in it and all my other assets.  FALSE!

Truth:  A reverse mortgage is a "non‐recourse" loan. If the lender doesn't get the loan paid back with interest from the sale of the house, that's the lender's problem. The borrower's other assets are untouchable. Reverse mortgage have been getting a lot of attention lately particularly because many people have saved only a small amount for their retirements and everything is just too expensive. Neither you nor your heirs are liable for repayment of the loan with anything other than the value of the house, period! And, the house can actually be sold for 95% of the appraised value and still satisfy the existing loan.

A Reverse Mortgage will cause me to lose my Social Security and Medicare benefits.  FALSE!

Truth:   A reverse mortgage is not considered income, so it does not affect any of these benefits.  Please consult a professional if you are receiving Medicaid or SSI benefits to make sure you stay within those guidelines.

I can't get a reverse mortgage if I have a life estate.  FALSE!

Truth: A life estate is perfectly acceptable and we can even do that while we are processing the HECM loan.

Read on!...

Today's Questions is:  If you own a house, how can you get money out of it -- and still live there?  You can't just sell your attic or downstairs bathroom, and who wants to live in the basement or rent part of your home to strangers?  

One answer is a Home Equity Conversion Mortgage or Line of Credit.  Instead of paying the lender, as you would with a normal "forward" mortgage, the lender pays you.  As the saying goes a HECM (pronounced he-um) is for people who are "house-rich" and "cash-poor".

The most popular kind of senior mortgage is the Department of Housing and Urban Development's (HUD) Home Equity Conversion Mortgage (HECM).  One reason:  All reverse mortgages require borrowers to attend an impartial counseling session by a HUD-approved counselor before they can proceed.  Homeowners age 62 or older can choose to receive their money in a number of ways:

a line of credit,
a lump sum payment
Monthly income for as long as they live in the house.
Or any combination of the above.  (The line of credit is the most popular -- since homeowners don't owe any interest until they take money out.)

The common theme here is that a HECM can have a useful purpose and they are very safe mortgage products backed by the Federal Housing Administration and HUD.  Make your retirement more comfortable and financially easier!


Contact our team of Reverse Mortgage Specialists and let us provide a complimentary consultation.  We will explain in detail exactly how the loan works, see what options may be available to you, and answer any questions that you or your loved ones might have.

FirstBank Mortgage Hotline:  (877) 865-6706.



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Published in Reverse Mortgage

FirstBank is a long standing member of and holds A+ rating from the BBB. We are subscribing members of the National Reverse Mortgage Lenders Association (NRMLA), and we are an approved direct lender with the US Department of Housing and Urban Development (HUD).

3500 Blue Lake Drive, Ste. 325 

Birmingham, AL 35243 
205-503-4188 | 800-200-6462


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