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Home Equity Conversion


       Mortgage Loan Basics





       Information for Financial Professionals







           Learn more about how Home Equity Conversion Mortgage (HECM) loans
           can offer an intelligent, tax-efficient solution for homeowners 62 and over.


                                                          Tom Selleck, AAG Paid Spokesperson



           What is a HECM?                                          Advantages of a Home Equity Loan

           A HECM loan enables homeowners 62 and older to access    Unlike a HELOC loan, a HECM loan does not require
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           their home’s equity as tax-free loan proceeds  while     monthly mortgage payments .
                                                                                             2
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           eliminating their monthly mortgage payments .
                                                                     FEATURE                 HECM            HELOC
           2 Borrower must continue to pay property taxes, homeowner’s
           insurance, and maintain the home.                         Monthly Mortgage Payment     O NO                P YES
                                                                                    2
                                                                     Minimum FICO Score     O NO                P YES
           Maintaining Ownership                                     Line of Credit Growth 3  P YES               O NO
           Borrowers retain ownership of their home but are subject
           to a lien granted to the lender. They are responsible for
           paying property taxes, homeowner’s insurance, home       Use of the Money
           maintenance costs, and otherwise complying with the loan   Common uses of the proceeds include paying for
           terms. The loan doesn’t have to be repaid until they leave,   monthly living expenses, medical bills, home repairs and
           sell the home, or fail to meet loan obligations.
                                                                    more. The HECM loan can also be used prior to portfolio
                                                                    withdrawals, after investable assets are depleted, or as a
           Monthly Payments                                         coordinated strategy based on portfolio returns.
           Borrowers make no monthly mortgage payments ,  unlike
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           traditional mortgages.                                   Government Benefits
                                                                    Funds from a HECM loan generally do not affect regular
           Loan Amount                                              Social Security or Medicare benefits, however, need-
                                                                    based benefits such as Medicaid and Supplemental
           The amount of the loan depends on four factors:          Security Income (SSI) could be affected.
               Age of the youngest borrower or eligible non-
               borrowing spouse
                                                                    Receiving the Money
               Current interest rates
                                                                    Borrowers can receive HECM loan proceeds in several
               Appraised value of the home                          ways:
               Amount of equity in the home                             A single lump sum

                                                                        Monthly payments
                                                                        Line of credit
                                                                        A combination of the above



           For industry professionals only - not intended for distribution to the general public.                    AAG026
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