By George A. Downey

Homeowners (62 and older) should consider the potential benefits a Home Equity Conversion Mortgage (HECM) reverse mortgage can provide. Designed for those who want to age in place, this program is unique, safe, and a versatile source of additional funds.
Why it’s important.
Rising prices, volatile markets, longevity, and other risks threaten aging Americans. Home equity, the largest asset of most, might provide a solution. Because home equity is not liquid, it is commonly overlooked as a financial resource.
However, it could be through a reverse mortgage, which converts a portion of home equity to cash and/or a line of credit to increase and extend financial security without selling, moving, or taking on unwanted monthly payments.
Are HECM reverse mortgages safe?
The HECM reverse mortgage is protected by federal (HUD/FHA) insurance guaranteeing performance as long as the loan remains in good standing. Then, regardless of any future adverse changes that might affect the economy, financial markets, or real estate values, the loan terms and funding are guaranteed, even if the lender goes out of business.
Reverse Mortgage benefits
• Improved cash flow: No monthly loan payments required.
• Increased liquidity: Withdrawals are received income tax-free.
• No title or change of home ownership.
• Credit line growth: The undrawn balance of the credit line grows (compounds monthly).
• No maturity date: Repayment not required until no borrower resides in the property.
• Non-recourse loan: No personal liability for borrowers or heirs.
• Protection against real estate and/or financial market declines.
• Terms and funding guaranteed while good standing maintained.
• Borrower obligations (to keep the loan in good standing) limited to:
• Keeping real estate taxes, homeowner’s insurance, and property charges current.
• Providing basic home maintenance.
• Continuing occupancy as primary residence.
What to do?
Older homeowners should learn if they are eligible and how potential benefits might apply to their situation. While HECMs provide significant financial and other benefits for many, it may not be a suitable solution for others. Suitability requires thorough consideration of financial and non-financial considerations to assure suitability.
Consultation with a Certified Reverse Mortgage Consultant (CRMP) is recommended. CRMPs are exam-tested, experienced, and bound by the National Association of Reverse Mortgage Lenders Association’s Code of Conduct and Professional Responsibility.
Other considerations. *https://fred.stlouisfed.org/series/CSUSHPINSA

Eligibility requirements apply. HECM counseling is required. Subject to credit and income approval. You must occupy the residence as your primary home. You must continue to pay for property taxes, insurance payments, homeowners’ association fee, home maintenance costs, and other fees as required. You must have significant cash available for the down payment. The balance of the loan grows over time and interest is charged on the balance. The loan becomes payable when the last borrower on eligible non-borrowing spouse passes away, sells the home, permanently moves out, defaults on taxes, insurance, or maintenance, or otherwise does not comply with the loan terms. 

About the Author: George Downey, CRMP (NMLS ID 10239) is the Regional Senior Vice President of The Federal Savings Bank branch located at 100 Grandview Road, Suite 105, Braintree, MA 02184. Contact Mr. Downey at 781-843-5553 / Cell 617-594-3666 / gdowney@thefederalsavingsbank.com, www.thefederalsavingsbank.com/georgedowney