If you are a retiree wanting to move to a new home or you have decided to stay in an eligible house, you might want to consider getting an HECM or Home Equity Conversion Mortgage.
HECM or better known as reverse mortgage is where your retirement income will come from. In the United States, the HECM reverse mortgage are insured and regulated by the federal government through the Department of Housing and Urban Development (HUD) as well as the Federal Housing Authority (FHA).
According to Forbes, the HECM program is composed of the variable and fixed-rate loans. The fixed-rate loan is not common though. Retirees choose reverse mortgage after considering all possible options during their retirement planning. Reverse mortgages nowadays still connote negative impression to people but not the same intensity as before. Thanks to television commercials that constantly air about reverse mortgages.
Furthermore, the developments made in the past few years also allow this type of mortgage hard to dismiss. The improvements the federal government is making towards the HECM program include developing its sustainability as well as ensure the borrowers have enough funds so they can continue funding their property taxes and other expenses.
Academically, research articles demonstrated that responsible use of reverse mortgage improves one's overall plan for retirement income. Reverse mortgages allow responsible retirees the choice to create liquidity for an asset that was otherwise illiquid. This can in the long run help support a more effective retirement income strategy.
An article from Nolo said most retirees regard reverse mortgages as a better way to use their home (their most important asset) to obtain an income that is much needed later in their life. Reverse mortgage also allows retirees to draw towards home equity. This is in order for them to receive monthly income without the need to pay their loan until their death.