HECM
The federally insured Home Equity Conversion Mortgage is available to qualifying homeowners age 62 or older. It can provide funds through several payment choices.
How it worksUnderstand the choices
Reverse mortgage options
Different loan types solve different problems. Start with the purpose, then review eligibility, costs, obligations, and alternatives.
HECM for Purchase
A qualifying buyer can use a HECM as part of the financing for a new primary residence, often to support a move in retirement.
Compare purchase optionsLine of credit
An available HECM line can be part of a liquidity plan. Its balance, costs, and future availability should be evaluated with the complete loan terms.
Explore a home equity reserveProprietary programs
Some private reverse mortgage products may serve different property values or borrower ages. Availability and terms depend on the lender and state.
Ask about current optionsCommon ground: These are loans secured by the home. A borrower must meet occupancy and other obligations, including taxes, insurance, and maintenance. Costs and interest reduce remaining equity over time.
A practical comparison
What changes with each approach?
Use a HECM on the home you own
Potential purposes include replacing a required monthly mortgage payment, creating a line of credit, or drawing funds for a planned expense. Existing mortgages generally must be paid off at closing. The loan balance grows as interest and charges accrue, so the cost over time matters.
Use a HECM to purchase
The buyer contributes funds at closing and finances the rest through a HECM for Purchase on the new primary residence. This can change how much cash remains available after the move. Richard compares it with buying for cash and conventional financing, including the total costs of each path.
Use a private reverse mortgage
Some private programs serve situations outside standard HECM limits or age rules. Their rates, safeguards, draw choices, and state availability may differ. A current written proposal is essential.
Wait or use another source
Sometimes the better choice is to keep the current mortgage, use other assets, downsize, or revisit the question later. It is worth understanding what waiting could change before you decide.
Before applying: A HECM involves independent counseling with a HUD-approved counselor and a financial assessment. An illustration should show available proceeds, upfront costs, projected balance, and what could remain for the homeowner or heirs under stated assumptions.
Which option could help you move forward?
A payment, a purchase, a reserve or a planned expense gives Richard somewhere useful to start. He can prepare the comparison around your goal.