Reverse Mortgage (HECM)
A loan available to homeowners 62+ that converts home equity into tax-free cash without monthly payments, repaid when the home is sold or vacated.
Quick answer
Reverse Mortgage (HECM): A loan available to homeowners 62+ that converts home equity into tax-free cash without monthly payments, repaid when the home is sold or vacated. Typical cost: 2%–4% upfront origination + MIP; interest accrues monthly..
Why it matters
HECMs can fund retirement living but carry high upfront fees and complex consequences for heirs — proceed only after independent counseling.
Typical cost
2%–4% upfront origination + MIP; interest accrues monthly.
Pros
- • No monthly payments
- • Non-recourse — heirs never owe more than the home is worth
- • Federally insured
Cons
- • High upfront costs
- • Reduces estate inheritance
- • Risk of forced sale if taxes/insurance lapse
Common uses
- • Retirees needing income or aging in place
Alternatives
HELOCDownsizingHome equity loan
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Frequently asked questions
- Will my heirs lose the house?
- Heirs can pay off the loan and keep the home, or sell it — non-recourse means they never owe more than the sale proceeds.
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Estimates and guidance are educational. Always confirm with a licensed local professional before making decisions.