Home Equity Conversion Mortgages: A Brief Overview



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A home equity conversion mortgage is a reverse mortgage that is supported by the federal government. As the name implies with a reverse mortgage a homeowner receive payments from a lender rather than making them. In return, the lender in essence purchases equity in the borrower's home.

As stated above no payments are expected of you so unlike a conventional mortgage you don't have any credit or income qualifications to meet if you want to take out a HECM. The only requirements are that you must own your home outright or have significant equity in it, you must be at least 62 years of age, and you must keep the property in good repair.

You can receive the payments incrementally, in a lump sum, or on an as-needed basis via an open-ended line of credit. The home equity conversion mortgage becomes due when you either pass away or decide to move from the home of your own volition.

Some people will use income derived from a HECM to purchase long-term care insurance. They then sell the home to pay off the reverse mortgage when they must enter long-term care. They keep the remainder after paying off the loan and their long-term care costs are taken care of by their insurance benefits.

If you are interested in learning more about comprehensive long-term planning, including the possibility of the intelligent utilization of a HECM, the wise course of action is to sit down and discuss your future with an experienced Nassau County financial planning lawyer.

ABOUT THE AUTHOR: Saul Kobrick
Experienced estate planning attorneys Garden City NY of the Law Offices of Saul Kobrick P.C. offers estate planning and business planning resources to residents of Garden City NY.

Copyright The Law Offices of Saul Kobrick, P.C.
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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.