The Truth about the Federally Insured HECM Program

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The Federally Insured Reverse Mortgage (HECM)…is not the reverse mortgage of the past!

First and most important fact to know – This is a Federally Insured program that is heavily regulated through the government HUD (Housing and Urban Development Department). All of the facts concerning the Federally Insured Reverse Mortgage program shared on this website are exactly what you would find on the HUD website. First National Bank is the largest writer of the HUD Federally Insured Reverse Mortgage in the State of Florida.

Myth #1
The Bank or Government will own my home after I get a HECM

FALSE. You are not selling your home. You maintain full title and ownership as you would if you were to take a traditional mortgage and can sell the home at any time with no prepayment penalty. The Government requires that title always remain in your name as long as you are living in the home.

Myth #2
My heirs will be held responsible for repayment

FALSE. The HECM is a “non-recourse” loan. This means that repayment of the loan can only come from the proceeds of the sale of the property and the amount due can never exceed the home’s value. The house stands for your debt on this loan. No debt could ever be passed to your children or heirs from a HECM.

Myth #3
The HECM requires that I make monthly payments

FALSE. There are NEVER any monthly payments for as long as you live in your home. You are only responsible for paying taxes, insurance and general upkeep of the home.

Myth #4
I must have good income and credit to qualify

FALSE. A HECM has no income, credit or medical requirements to qualify. Qualifying is simply based on the homeowner’s age, home value and equity in the home.

Myth #5
I cannot currently have a mortgage on my home

FALSE. Though the proceeds from the HECM would be used to pay off any existing mortgages first, the remaining equity would be given to you. In fact, many people get a HECM for this reason alone, to eliminate their monthly mortgage payments forever!

Myth #6
I am losing the remaining equity in my home by getting a HECM

FALSE. It’s your money “Retained Equity”. The difference between the HECM and the value of your home is your equity (money). Example: Home is worth $150,000 and the HECM is for $100,000, the difference of $50,000 remains in your home for your future use.

Myth #7
I am using up all my children’s inheritance

FALSE. Your heirs are entitled to all the equity remaining in the home as well as the appreciation the property accrues throughout the years. Additionally, a HECM offers the freedom to assist your children financially today and avoid the potential of burdening them with your expenses.