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Reverse Mortgages July 22, 2004

Ken Terrill, President, with a Primer on . .
Reverse Mortgages


What are "HECM"" and "Home Keeper" mortgage programs

What are "HECM"" and "Home Keeper" mortgage programs?


These programs are special types of mortgage loans that enable you, as an older homeowner, 62 years of age or older, to tap into the equity you have in your home while giving you the maximum amount of flexibility to address your particular financial needs.  You may choose a lump sum payment to pay off debt, fix up your home or other expenses.  You may wish to receive regular monthly payments to supplement your income or a line of credit that you can tap into at any time.  You may be able to combine the cash, monthly payment or credit line options if that fits your needs.  With the Home Keeper program you can also get cash to help you purchase a new home.


Unlike traditional home equity loans, no repayment of the HECM or Home Keeper mortgage is required until you no longer occupy the home as your principal residence.  At that time, the loan becomes due and payable.


With either of these reverse mortgage programs, you borrow against the equity of your home, and receive loan proceeds according to the payment plan that you select.  These plans are described in upcoming columns.  As a borrower, you may change payment plans as many times as you wish, unless you take the full amount available in a lump sum at closing.


When you sell your home or vacate it for other reasons, the accrued interest plus what the lender has paid to you or on your behalf through the years is due and payable, usually out of the proceeds from the sale of your home.  Any proceeds in excess of the amount owed on the loan belong to your or your estate.