I'm considering a reverse mortgage and understand that I am not required to make payments; when and how is a HECM repaid?

A HECM must be repaid in full when you die or sell the home. The lender recovers the monies advanced to you plus interest when the home is sold. If the home is sold for more than is required to satisfy the obligation, the remaining equity goes to you or your heirs.

An important consideration is that a HECM becomes due and payable if:

  • You do not pay property taxes, or hazard insurance or other obligations.
  • You permanently move to a new residence.
  • You, or the last borrower, fail to live in the home for 12 months in a row.
  • You allow the property to deteriorate and do not make necessary repairs.

It is important to keep these factors in mind when deciding on whether a HECM is right for you. You should consider how long you plan to live in the home, and if you will have the financial resources to maintain the property and pay the taxes.