A Loan that Works For You
Published: August 2020
Author: Bank of England Mortgage Staff
A Home Equity Conversion Mortgage (HECM), known as a reverse mortgage, helps individuals age 62 and older, access wealth in their primary home. This powerful retirement funding tool taps into home equity. Borrowers make no monthly payments for as long as they live in the home, but must continue to pay property taxes and homeowner’s insurance, maintain the home, and otherwise comply with loan terms. Unlike a traditional home equity line of credit (HELOC), the unused portion of the reverse mortgage line of credit grows over time, allowing access to more funds as the borrower ages. And the line cannot be reduced or revoked by the lender, as long as the terms of the loan are met- ensuring the funds will be there when needed.
What is a HECM?
HECM or Home Equity Conversion Mortgage. It is a government insured HECM is also non-resource, meaning that the loan payoff will never be more than your home is worth at the time repayment is required. A HECM loan can create a line of credit that may increase over time regardless of your home’s value.
Homeowners insurance protects you against home damages or theft. Rather than risk having to pay to repair or rebuild your home (your biggest investment!) after a fire or tornado, homeowner’s insurance takes the risk off your shoulders and gives it to your insurance company..
What is the purpose of a reverse mortgage?
The purpose of a reverse mortgage is to convert a portion of the equity in your home into tax free income to use for whatever financial purpose you want. The program also does not require monthly mortgage payments and repayment is deferred until the last borrower has left the home. You can then use the funds to pay off a home equity loan, high interest credit card balance or medical bills. A Reverse mortgage will allow you to continue living in your comfortable and familiar environment thereby preserving your connection to friends, neighbors, community, etc.
At Bank of England Mortgage, we are dedicated to informing citizens about how a reverse mortgage loan can enhance the life of seniors and help them age in place. Secretary, Donald Rumsfeld one said, “Well, of course, you don’t know what you don’t know.” Please call today to learn more about this safe and helpful way to access money.