- Be 62 years of age or older (minimum age at application signing);
- Own the property outright, or have considerable equity;
- Occupy the property as your principal residence;
- Not be delinquent on any federal debt;
- Participate in a consumer information session given by a HUD-approved HECM counselor.
Some basic characteristics of HECM reverse mortgage loans are:
- Closing costs are typically rolled into the loan;
- No pre-payment penalty;
- Insured by FHA/HUD;
- A non-recourse loan, meaning that you won’t owe more than the home is worth;
- The funds you receive are tax free, and can be used for any purpose;
- You don’t relinquish the title to your home;
- You as the homeowner keeps all future appreciation in value;
- The equity is yours as the borrower. Upon leaving the property, you will pay back what you borrowed, plus interest.
Another interesting feature of a FHA HECM, is that it can be used to purchase a primary residence. But you must be able to use cash on hand to pay the difference between the HECM proceeds and the sum of the sales price plus the closing costs.