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Home Equity Conversion Mortgage (HECM)

Unlock the equity in your home for a more secure retirement.

While most people approaching retirement think of their personal net worth in terms of savings, stocks, bonds, or retirement accounts, the reality is quite different. Studies show that half of homeowners age 62 or older have at least 55% of their net worth tied up in home equity!1

What exactly is a “reverse mortgage”?

With a reverse mortgage, more accurately now called a Home Equity Conversion Mortgage (HECM), homeowners age 62 or older receive a portion of their home’s equity while living in the home, and with no monthly mortgage payments. The funds are income tax-free2, and borrowers retain ownership and title to their home as long as they:

  • Live in the home as their primary residence.
  • Continue to pay required property taxes and homeowners insurance.
  • Maintain the home according to Federal Housing Administration requirements.

What are the benefits and uses of a reverse mortgage?

From eliminating your monthly mortgage payment to paying for unexpected expenses, a reverse mortgage can help provide financial flexibility and relieve many of the financial pressures you face in retirement. A HECM can allow you to:

  • Pay off an existing mortgage, monthly bills, or healthcare expenses to increase cash flow.
  • Make needed home repairs or modifications to live more comfortably.
  • Replace taxable withdrawals from 401(k) or other retirement plans with tax-free reverse mortgage proceeds.2
  • Establish a line of credit for emergencies or occasional expenses.
  • Help a child or grandchild with major expenses, like a down payment on a home or college tuition.

1 CFPB Report to Congress on Reverse Mortgages, June 2012. Note: A credit line is available only on adjustable-rate HECM products.

2 Consult a financial advisor and appropriate government agencies for any effect on taxes or government benefits.

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