The Home Equity Conversion Mortgage (HECM) is the Federal Housing Administration's (FHA) reverse mortgage program which enables borrowers to withdraw some of the equity in their home. The borrower chooses how to withdraw their funds, whether in a fixed monthly amount or a line of credit or a combination of both.

HECMs boast many advantages to borrowers, including optional monthly mortgage payments,1 a growing line of credit,2 non-recourse loan protection, and no income limitations.

A Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage, is a special type of home loan only for homeowners who are 62 and older.

A conversion loan is a loan that rolls over, or converts, to a different loan structure after a certain term. Pricing both pieces of the loan at once allows you to account for the sequential closing and funding dates in the opportunity profitability calculations.

0.25-0.5 percent This switchover comes at a price – conversion fees range from 0.25-0.5 percent of the outstanding loan, depending on the lender. Conversion allows you to avoid documentation hassles and legal or inspection fees that balance transfer to other lenders will entail.

Cons of HECM Some of the potential disadvantages of getting a HECM include: You have to live in your home: When you get a HECM, your property must be your principal residence for much of the year. You'll have to pay back the HECM if you sell the home or want to move. Just like with a traditional mortgage.

HECM Purchase Reverse Mortgage Rates APR Illustration: 7.560% + . 50% Monthly MIP = 8.060% in total interest charges. Assumes $250,000 loan amount and includes . 50% Mortgage Insurance, standard 3rd party closing costs.

A HECM must be paid off when the last surviving borrower or Eligible Non-Borrowing Spouse: Dies. Sells their home, or. No longer lives in the home as their principal residence, meaning where they live for a majority of the year.

Most reverse mortgages today are called HECMs, insured by the Federal Housing Administration (FHA). It is called a “reverse” mortgage because, instead of making payments to the lender, the borrower receives money from the lender.

A “conversion rate” is the interest rate your lender offers you when you convert from one mortgage term to another. Conversion rates apply when you convert from a: variable rate to a fixed rate. convertible term to a fixed or variable term. line of credit to a fixed or variable term.

The credit conversion factor (CCF) is a coefficient in the field of credit rating. It is the ratio between the additional amount of a loan used in the future and the amount that could be claimed.

$6,000 A lender can charge the greater of $2,500 or 2% of the first $200,000 of your home's value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000. Lenders or their agents provide servicing throughout the life of the HECM.