Page 2 - VGM Your Guide Brochure

How does it work?
A HECM loan allows you to turn some of the equity in your home into cash
to improve your lifestyle. You will continue to live in your home and retain
ownership without monthly mortgage payments. The loan balance will be
repaid when the last borrower or eligible, non-borrowing spouse has left
the home or does not otherwise comply with the loan terms. (Borrower
must continue to pay property taxes, homeowners insurance, and home
maintenance costs.) The amount you receive is based on the age of the
youngest borrower or eligible non-borrowing spouse, appraised value of the
home, and the current interest rates.

HECM Has Built-in Safeguards to Better Protect Borrowers
The United States Department of Housing and Urban Development (HUD)
has put safeguards in place to protect borrowers and improve HECM loans.

Financial Assessment Changes to HECM loans require a thorough
evaluation of the potential borrower’s ability to meet the financial
obligations of the loan terms such as the ability to pay for homeowners
insurance, property taxes, and home maintenance.

How can
Non-borrowing Spouse HECMs are available to borrowers with an
eligible, non-borrowing spouse (one under the age of 62), with rules in you qualify?
place to allow such spouses to remain in the home, even if the borrower
passes away, provided they continue to honor the terms of the loan. You must be age
62 or older (a non-

Counseling Before loan approval, potential borrowers must complete a borrowing spouse
counseling session with an FHA-approved counselor. The counselor will may be under 62).
ensure that borrowers understand all of their options and are in a position
to decide if a HECM loan is right for them.
You must live in
Common Uses of HECM Loan Proceeds your home (must
be princiapal
Eliminate monthly mortgage payments (a requirement of the
loan; borrower must continue to pay property taxes, homeowners residence).
insurance, and home maintenance cost).

Make retirement savings last longer.
You must own
Use a HECM line of credit to build a safety net for unplanned your home.
emergencies, home repairs, and healthcare expenses, or preserve
investment accounts during market downturns.

Supplement your retirement income with monthly payments. You must meet
the financial
Use a HECM for Purchase loan to buy a home that better fits
your needs. requirements of
the HECM loan.
Support aging in place expenses, like caregiving and
home modifications.