HECM, or home equity conversion mortgages, are a complex financial product. Taking a little time to understand the complications of these loans or enlisting the help of a licensed professional can benefit you immensely if you’ve decided to take advantage of this unique opportunity.
First of all, it’s a good idea to understand what you’re borrowing against. As you pay your conventional mortgage, the loan that you got from the bank to purchase your home, you build up equity in your home. The amount of equity you have is then available for you to borrow against in the form of a reverse mortgage.
Who Can Benefit
A reverse mortgage loan is a financial product available only to seniors. This makes sense because it takes a long time to pay off a mortgage, so seniors are the only ones likely to have a lot of home equity. If you are 62 years of age or older, you can secure this type of loan.
One of the major benefits of this loan is that it doesn’t require you to make any monthly payments. Every single cent that you borrow can be deferred until one out of a specific set of events occurs. These circumstances tend to vary depending on the lending organization or the loan. An accredited advisor from the company will be able to help you with any questions you have about the terms of the reverse mortgage loan in question.
Who to Choose
You can spend a lot of time figuring out the specific requirements and benefits of a product offered by a company just to realize it’s not a good fit. Avoid this by getting advice on a reverse mortgage loan from an agency that specializes in quality service and communication.