What is a HECM?
In the field of financial planning, a HECM is a home equity conversion mortgage. These are reverse mortgages that are supported by the federal government. These loans are totally legitimate, and in fact you must complete an informational session that is approved by the United States Department of Housing and Urban Development before you can close on such a loan.
It should be noted that though they are legitimate, taking out a home equity conversion mortgage is not always a shrewd financial maneuver. There are costs associated with these loans including fees and interest, so be certain you have received all the relevant information.
Yet, if you are in a position where you need liquidity late in your life, a home equity conversion mortgage could provide a solution.
You donít have to qualify in terms of income or credit because you're not being asked to pay anything out-of-pocket. The only requirements are that you must have significant equity in your home, you must keep the property in good repair and you must be at least 62 years of age.
After you pass away or decide that you would like to leave the property you or your heirs are required to pay off the loan. You can then sell the house and use the proceeds to pay off the HECM balance. Be certain to ask about repayment requirements and what happens if the real estate market takes another reversal and the equity is less than the amount owed when it comes time for repayment.
To learn about long-term strategies that will provide you with latter life liquidity simply take a moment to pick up the phone and arrange for a consultation with a good Reno financial planning attorney.
ABOUT THE AUTHOR: Bradley Anderson
Experienced estate planning attorneys Reno NV of the Anderson Dorn & Rader Ltd offers estate planning and business planning resources to residents of Reno NV.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.