HECMs - The Basics

Because HECMs and other Reverse products do not require repayment, they require a substantial amount of equity, often 40% or more. 

Although there is no actual mortgage to repay, lenders will still verify that you are able to pay your other obligations such as taxes, insurance, and other monthly expenses.

HECMs and other Reverse products allows extremely lenient credit history. However, they still look closely at bankruptcies, foreclosures, and other major derogatory credit issues. 

Since these loans are insured by the FHA, the requirements for the home's condition are similar to standard FHA loans. Any kind of chipped or peeling paint, steps without railings, or other issues are required to be fixed prior to closing the loan.

While there are no formal loan limits on HECM loans, the amount that you are able to borrower is capped by your home's value. The highest value considered for most homes is $679,650; if more value is required to be considered a jumbo reverse may be more suitable.

HECM loans and other Reverse products come with a lot of negative stigma associated with them. Some include:

"I don't want the bank to take my home"

"I don't want my kids to lose their inheritance"

"When i pass away my kids won't be able to keep the house or will be responsible for the amount the home is sold for"

All of these statements and so many more are MYTHS! Take a deeper dive to find out more about how reverse mortgage products really work!