A home equity conversion mortgage (HECM) is a reverse mortgage. The HECM name is probably a bit more descriptive in that there is a conversion of the equity in the home, making it accessible to the homeowner. According to Wikipedia equity is the market value of a homeowner’s unencumbered interest in their real property or the difference between the home’s fair market value and the outstanding balance of all liens on the property. The reverse mortgage (HECM) can turn a portion of a home’s equity into regular cash payments for the homeowner. We get the name reverse mortgage from the fact that it works like a traditional mortgage, but in reverse.
Rather than making a payment to your lender each month, the lender pays you through advances against your equity. There are eligibility requirements with a notable one being that the youngest homeowner has to be 62 or older in order to qualify. A reverse mortgage can help seniors with limited incomes meet their living expenses without having to sell their home. If you are considering a reverse mortgage be sure to research the reverse mortgage rules, reverse mortgage pros and cons, and how a reverse mortgage works.
The response above is not intended to be anything other than the educated opinion of the author. It should not be relied upon as financial advice.