Reverse Mortgage: Home Equity Conversion Mortgages

Home Equity Conversion Mortgages are another name for federally-insured reversed mortgages and they’re backed by the US Department of Housing and Urban Development. HECMs are generally more expensive than other loans, have higher up front costs and are generally worse in terms of cost if you leave your home soon after security in the reverse mortgage. In return for paying the higher costs, there are no income restrictions and you are free to use the money however you please.

With an HECM, you will have to first meet with a counselor from the government-approved housing counseling agency so that you fully understand all the costs and they’ll give you some alternatives (at least they should). If you want the reverse mortgage because you need to perform some repair work on your home, they will point you towards single purpose reverse mortgages instead because they’re cheaper.


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