A Home Equity Conversion Mortgage (HECM) allows homeowners 62 years and older (or within 6 months of your 62nd birthday), to convert part of the equity in your home into cash without having to sell your home, take on a new mortgage payment, or pay additional monthly bills.
The HECM is the only Reverse Mortgage federally-insured and backed by the U.S. Department of Housing and Urban Development (HUD). In addition, HECMs are only available through an FHA-approved lender - like Nutter. In fact, Nutter Home Loans originated the very first Reverse Mortgage in 1989.
Reverse Mortgages get their name because you get paid versus you paying the lender. Reverse Mortgages take part of the equity in your home and convert it into payments to you. Plus, a HECM offers several options to receive your payments, whether it’s a lump sum payout, a line of credit, or even as a monthly payment to you - you get to choose!
The amount you borrow is based on the value of your home, your age and current mortgage interest rates. The loan will first pay off your existing mortgage (if you have one), the rest of the money can be used for anything, whether it’s for an immediate need or to use in the future. However, you are still responsible for property taxes, homeowners insurance and property maintenance costs.
Generally, you don’t have to pay back the money for as long as you live in your home. However, you, your spouse, or your estate would repay the loan when the owner no longer occupies the property. Typically, to get money to repay the loan, families sell the home when the owner no longer lives there.
It’s important to note a Reverse Mortgage is a loan that must be repaid, and carry monthly interest charges, fees and other costs but they are simply added to the loan balance versus paid by the borrower (owner of the home). We counsel homeowners to not use these loans too early in retirement and risk depleting their equity too soon. Your home equity decreases over time while the loan balance increases. In some cases, the value of that loan exceeds the value of the home and will result in the borrower (or his/her estate) not having any proceeds when the home is sold.
Use our Reverse Mortgage Calculator to see how much money is available from your home.
Since 1951, we’ve helped people save hundreds, or even thousands of dollars a month, when they purchase or refinance their mortgage with Nutter.