Financing · Entity

Reverse Mortgage (HECM)

A loan available to homeowners 62+ that converts home equity into tax-free cash without monthly payments, repaid when the home is sold or vacated.

Quick answer
Reverse Mortgage (HECM): A loan available to homeowners 62+ that converts home equity into tax-free cash without monthly payments, repaid when the home is sold or vacated. Typical cost: 2%–4% upfront origination + MIP; interest accrues monthly..

Why it matters

HECMs can fund retirement living but carry high upfront fees and complex consequences for heirs — proceed only after independent counseling.

Typical cost
2%–4% upfront origination + MIP; interest accrues monthly.

Pros

  • No monthly payments
  • Non-recourse — heirs never owe more than the home is worth
  • Federally insured

Cons

  • High upfront costs
  • Reduces estate inheritance
  • Risk of forced sale if taxes/insurance lapse

Common uses

  • Retirees needing income or aging in place

Alternatives

HELOCDownsizingHome equity loan
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Frequently asked questions

Will my heirs lose the house?
Heirs can pay off the loan and keep the home, or sell it — non-recourse means they never owe more than the sale proceeds.
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