What is a Home Equity Conversion Mortgage (HECM)?
A home equity conversion mortgage (HECM) is a type of Federal Housing Administration (FHA) insured reverse mortgage. Home equity conversion mortgages allow seniors to convert the equity in their home to cash. The amount that may be borrowed is based on the appraised value of the home (subject to FHA limits), and the age of the borrower (borrowers must be at least 62 years old). Money is advanced against the value of the equity in the home. Interest accrues on the outstanding loan balance, but no payments must be made until the home is sold or the borrower(s) die, at which point the loan must be repaid