Harbor Mortgage Company
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Reverse Mortgages

Understanding Reverse Mortgages (HECM)

A reverse mortgage—most commonly known as a Home Equity Conversion Mortgage (HECM) backed by the Federal Housing Administration (FHA)—is a specialized loan designed specifically for homeowners aged 62 and older. It allows you to tap into the wealth you have built in your home to access cash, with one major advantage: it requires zero monthly mortgage payments.

Instead of paying down the loan each month, the loan balance is simply deferred. The loan only becomes due and payable when the last surviving borrower sells the home, moves out permanently, or passes away.

How You Can Receive Your Funds

One of the best features of a reverse mortgage is its flexibility. You can choose to receive your equity in several ways:

  • Lump Sum: Receive a single, upfront disbursement at closing to pay off existing debt or make a major purchase.
  • Line of Credit: Access funds on-demand. The unused portion of your credit line actually grows over time, giving you access to more cash as you age.
  • Monthly Payouts (Term or Tenure): Receive reliable, fixed monthly payments for a set period of years, or for as long as you live in the home.

Key Eligibility Requirements

To qualify for a reverse mortgage, borrowers must meet a few standard guidelines:

  • Age: At least one borrower on the title must be 62 years of age or older.
  • Property Type: The home must be your primary residence.
  • Home Equity: You must own the home outright or have a substantial amount of equity (typically at least 50%).
  • Financial Assessment: Lenders will verify that you have the financial capacity to meet your ongoing obligations.

Borrower Responsibilities

While a reverse mortgage eliminates your monthly mortgage payment, you remain the owner of the home. As such, you are still required to:

  • Keep current on your property taxes.
  • Maintain active homeowners insurance.
  • Keep the property in good repair according to FHA standards.

Why Choose a Reverse Mortgage?

For many retirees, their home is their largest asset. A reverse mortgage allows you to put that asset to work, providing financial freedom and peace of mind. Whether you want to eliminate your current mortgage payment, fund home renovations to age in place safely, or build a safety net for unexpected costs, a reverse mortgage lets your home take care of you.