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To make the most of the reverse mortgage purchase program, many seniors choose to downsize to smaller, more suitable properties. If borrowers' reverse mortgage proceeds exceed the price of their new home, they will receive the extra cash. The additional cash can be used to pay the borrower's property taxes, homeowners insurance, and renovate the home. This helps seniors maintain their new loan while taking the greatest advantage of this unique program. -You can choose one of several options to receive your loan, which makes it one of the most flexible home loans available. Financial security is an all-American dream. Most of us probably may not truly understand the meaning of financial security until we join the senior citizen club. This is because there is a special and safe equity conversion program that can give older Americans greater financial security. The Home Equity Conversion Mortgage (HECM) is a reverse mortgage program created by HUD's Federal Housing Administration that enables you to withdraw some of the equity in your home. The program is specially developed for senior citizens to supplement social security, pay for unexpected medical expenses or many more reasons. Basically a reverse mortgage allows you to convert a portion of the equity in your home, that built up over years of home mortgage payments, into cash. There is, however, no repayment requirement until you no longer use the home as your primary residence. You also have the option of using a HECM to buy a primary residence if you have the cash to pay the difference between the HECM proceeds and the sales price including other attached costs or fees. This particular program also enables you to convert part of the equity in your home into tax-free cash without having to take on a new monthly mortgage payment. These mortgages are named as such due to the fact that the payment stream is reversed because instead of making monthly payments to your lenders, they will be the ones making payments to you. Before you go out looking for a HECM provider, it may be a good idea for you to know reverse mortgage eligibility characteristics in order to find out if you qualify to apply for one. The first qualification factor is your age - you must be at least 62 years old. If you have a few years before turning 62 you are not yet eligible for a HECM but you may start exploring all the eligibility requirements and find out all the necessary steps to get one. An early start would do no harm. It is also required that you have a single-family home or other approved property and you must be the registered owner of the property. In short, your name must be on the title deeds. The FHA also requires you to live in the home as your primary residence if you wish to take a HECM on your home. You must also be able to pay off existing loans with the proceeds from your reverse mortgage. The HECM is unique not only because of the eligibility requirement before you apply for one but also because you will be required to remain eligible and continue to qualify even after the loan is made. Generally you will have to continuously use the home as your primary residence and you must keep current on taxes, insurance and maintenance or any other property-related expenses. Your property or home must also qualify for the FHA HECM. Usually your home must be at least a 1-4 unit home with you occupying one unit and it would be a good thing if your home is HUD-approved. It is also advisable that you understand the specific attributes of a HECM and accept that it is not your conventional typical loan. Although in several aspects a HECM might seem similar to a home equity line of credit (HELOC) they are in fact very different programs designed for different groups of people. Basically with a second mortgage or a HELOC, you must have sufficient income and you will be required to make monthly mortgage payments. The beauty of a HECM is that it pays you and is always made available regardless of your current income. The approved loan amount is also dependent on your age, the current interest rate and the appraised value of your home. In short, the older you are the lower the interest. It might be a good idea for you to engage a specialist to get you reverse mortgage help. Sometimes you might feel like you already know what you are doing but a little bit of extra research is going to take you a long way. reverse mortgage calculator A good thing is, that the reverse loan has no monthly payments, but the capital, interests and all the costs will be paid back, when the loan will be closed. This happens, when a senior will sell the home, move permanently away or die. Then the home will be sold and the loan costs will be paid away from the selling price. If this does not cover the whole amount, the obligatory mortgage insurance will cover the missing part. Regardless of the amount that is borrowed via monthly payments in a reverse mortgage, you will never have to repay more than the actual value of the house that the loan is taken out against. This can be a major advantage for those who receive their reverse mortgage money as a monthly payment, since it allows them to get the money that they need without having to worry about reaching a cap on their funds or accruing a debt that the value of the house wouldn't be able to cover. Adviser Perspectives New Rules for Wealth Management