THE HOME EQUITY CONVERSION MORTGAGE (HECM) is the ONLY reverse mortgage that is insured by the federal government. HECM loans are insured by the Federal Housing Administration (FHA). FHA is governed by US Department of Housing and Urban Development (HUD). FHA tells HECM lenders how much to lend based on age and the value of home. The HECM program limits loan costs and FHA insures the lender will meet their responsibilities.
HECM usually give the largest payout of any reverse mortgage as well as more choices on how the money is paid and most importantly you can use the money for any purpose. Reverse Mortgages can be costly but HECM's are generally less expensive than those that are privately insured. Privately insured reverse mortgages may have lower fees but are usually higher in interest rate. Overall, HECM's are likely to be less expensive in the long run.
The state and local government sometimes offer reverse mortgages which cost the least but they are most always used for one specific purpose such as to pay your taxes or make a certain repair. Also mostly available to low to medium income.
HECM's are available all over the United States. A few key factors:
* Youngest owner must be 62 or older, live in home as primary residence and not be delinquent on federal debt.
* Home must be a single-family residence in a 1-4 unit dwelling or part of a planned unit development (PUD) or a HUD approved condo. Some manufactured homes are eligible but most mobile homes are not.
* Home must meet HUD's property standards but you have the option of using the HECM to pay for repairs that could be required.
* All homeowner's wishing to seek a HECM must attend counseling from a HUD-approved counseling agency. Loan officer can provide a list of counselors and borrower's must present an original certificate before loan can be approved.