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Your Guide to Home Equity Common Uses of HECM
Loan Proceeds
Conversion Mortgages
3 Eliminate monthly

mortgage payments (A
Use a portion of your greatest asset - your requirement of the loan;

home equity - to fund a better retirement. Borrower must continue
to pay property taxes,
homeowners insurance, and
HECM loans home maintenance costs.)

Home Equity Conversion Mortgages (HECMs), also known as reverse mortgage 3 Make retirement savings

loans, help American homeowners age 62 and older convert a portion of their last longer.
home equity into tax-free cash. HECMs are insured by the Federal Housing
Administration (FHA) and allow seniors more financial security as well as the 3 Use a HECM line of credit
ability to age in place.
to build a safety net for
unplanned emergencies,
How does it work? home repairs and

A HECM loan allows you to turn some of the equity in your home into cash healthcare expenses,
to improve your lifestyle. You will continue to live in your home and retain or preserve investment
ownership without monthly mortgage payments. The loan balance will be accounts during market
repaid when the last borrower or eligible, non-borrowing spouse has left downturns.
the home or does not otherwise comply with the loan terms. (Borrower
must continue to pay property taxes, homeowner’s insurance, and home 3 Supplement your

maintenance costs.) The amount you receive is based on the age of the retirement income with
youngest borrower or eligible non-borrowing spouse, appraised value of the monthly payments.
home, and the current interest rates.
3 Use a HECM for Purchase

HECM Has Built-in Safeguards to Better Protect Borrowers loan to buy a home that
better fits your needs.
The United States Department of Housing and Urban Development (HUD) has
put safeguards in place to protect borrowers and improve HECM loans.
3 Support aging in place

expenses, like caregiving
FINANCIAL ASSESSMENT Changes to HECM loans require a thorough and home modifications.
evaluation of the potential borrower’s ability to meet the financial
obligations of the loan terms such as the ability to pay for homeowner’s
insurance, property taxes, and home maintenance.

NON-BORROWING SPOUSE HECMs are available to borrowers with an Tom Selleck,
eligible, non-borrowing spouse (one under the age of 62), with rules in AAG Spokesperson
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.

COUNSELING Before loan approval, potential borrowers must complete
a counseling session with an FHA-approved counselor. The counselor will
ensure that borrowers understand all of their options and are in a position
to decide if a HECM loan is right for them.

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