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Is A HECM Loan
Right For You?
Retirement is often referred to as “the golden years” for a good
reason: For many, it’s the best season of life.
If you’re 62 or better and own your home, a Home Equity
Conversion Mortgage (HECM) loan could be just the resource
you need to give your portfolio a boost so you can retire better.
Tom Selleck
American Advisors Group Paid Spokesperson
Our simple guide below will help you consider the factors to determine
whether a HECM loan is the right option for you.
Loan Advantages
You can live in your home as long as you wish and Loan proceeds from a HECM are not taxable.
retain the title, as long as you comply with the loan. Because some of your sources of income, such as investments,
As with all other mortgage loans, a lien is placed on the may be taxed as you draw from the accounts, you may find
home. One common misconception about HECM loans is that this tax-free** loan source of money helpful. Borrowers are
borrowers are selling their homes to their lenders. This is simply still required to pay property taxes, insurance and home
not true; the borrower continues to own the home and retain maintenance costs.
the title. The primary purpose of a HECM is to help seniors stay **Loan proceeds are paid tax free; consult your tax advisor.
in their homes. Loan requirements include maintaining the
home and keeping current on property taxes and homeowner's
insurance. Government regulations empower you to make
informed decisions and protect you from default.
Borrowers are required to go through third-party counseling
No monthly loan payments are required.* by an FHA-approved counselor as part of the application
Whereas most mortgage loans require some form of monthly process. This acts as a safeguard by ensuring you have
repayment, a HECM requires no repayment until you move out thorough, unbiased information and that all your questions are
of or sell the home, pass away, or default on loan terms. This answered before you proceed with your loan. Other protections
is beneficial because the amount that would have been spent include limitations on lender origination fees and a financial
on housing can be diverted toward other expenses, saved, or assessment to evaluate your ability to fulfill loan obligations.
invested. However, if you so choose, you can make payments
with no pre-payment penalty. Your only financial responsibility
is to pay for property taxes, homeowner’s insurance, and home Upon repayment, the lender cannot collect more than
maintenance costs, leaving extra money in your pocket each the home is worth.
month. Because HECMs are non-recourse loans, borrowers will never
*Borrower(s) must continue to pay property taxes and have to pay more than the home is worth when a loan maturity
homeowner’s insurance, maintain the home, and otherwise event occurs.
comply with the loan terms.
Loan
Advant
ages
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