EDU Articles

Learn about investing, trading, retirement, banking, personal finance and more.

Ad is loading...
Help CenterFind Your WayBuy/Sell Daily ProductsIntraday ProductsFAQ
Expert's OpinionsWeekly ReportsBest StocksInvestingTradingCryptoArtificial Intelligence
IntroductionMarket AbbreviationsStock Market StatisticsThinking about Your Financial FutureSearch for AdvisorsFinancial CalculatorsFinancial MediaFederal Agencies and Programs
Investment PortfoliosModern Portfolio TheoriesInvestment StrategyPractical Portfolio Management InfoDiversificationRatingsActivities AbroadTrading Markets
Investment Terminology and InstrumentsBasicsInvestment TerminologyTrading 1 on 1BondsMutual FundsExchange Traded Funds (ETF)StocksAnnuities
Technical Analysis and TradingAnalysis BasicsTechnical IndicatorsTrading ModelsPatternsTrading OptionsTrading ForexTrading CommoditiesSpeculative Investments
Cryptocurrencies and BlockchainBlockchainBitcoinEthereumLitecoinRippleTaxes and Regulation
RetirementSocial Security BenefitsLong-Term Care InsuranceGeneral Retirement InfoHealth InsuranceMedicare and MedicaidLife InsuranceWills and Trusts
Retirement Accounts401(k) and 403(b) PlansIndividual Retirement Accounts (IRA)SEP and SIMPLE IRAsKeogh PlansMoney Purchase/Profit Sharing PlansSelf-Employed 401(k)s and 457sPension Plan RulesCash-Balance PlansThrift Savings Plans and 529 Plans and ESA
Personal FinancePersonal BankingPersonal DebtHome RelatedTax FormsSmall BusinessIncomeInvestmentsIRS Rules and PublicationsPersonal LifeMortgage
Corporate BasicsBasicsCorporate StructureCorporate FundamentalsCorporate DebtRisksEconomicsCorporate AccountingDividendsEarnings

What is a Home Equity Conversion Mortgage?

A home equity conversion mortgage (HECM) is a specialized type of reverse mortgage that allows homeowners to convert a portion of their home equity into cash. Insured by the Federal Housing Administration (FHA), HECMs offer older homeowners financial flexibility and liquidity without the need to sell their homes or make monthly mortgage payments. Let's delve into the details of this unique mortgage product.

An FHA-Insured Reverse Mortgage

A home equity conversion mortgage is a reverse mortgage that is specifically backed by the Federal Housing Administration (FHA). It enables homeowners aged 62 or older to access their home equity and convert it into funds. Unlike traditional mortgages, where homeowners make monthly payments to build equity, HECMs allow homeowners to receive an income stream, a lump sum payment, or a combination of both, depending on their preferences.

To be eligible for a home equity conversion mortgage, homeowners must meet certain criteria. They must be at least 62 years old and have significant equity in their homes. The loan amount is determined based on factors such as the appraised value of the home, the homeowner's age, and the prevailing interest rates. The FHA imposes limits on the maximum loan amount that can be borrowed through an HECM.

Flexible Repayment Options

One of the key advantages of a home equity conversion mortgage is its flexible repayment options. Homeowners can continue living in their homes without making monthly mortgage payments as long as they meet certain requirements. Repayment of the loan is typically triggered when the borrower(s) sell the house, move out of the property, or pass away. At that point, the loan must be repaid in full, including any accrued interest.

HECM vs. Proprietary Reverse Mortgages

While HECMs dominate the reverse mortgage market, it's essential to distinguish them from proprietary reverse mortgages. HECMs are regulated and insured by the FHA, offering standardized terms and protections for borrowers. Proprietary reverse mortgages, on the other hand, are privately sponsored products that may provide higher borrowing amounts and potentially lower costs, but without the same level of oversight and FHA-backed insurance.

The Economics of HECMs

HECMs generally offer competitive interest rates compared to proprietary reverse mortgages. The economic viability of choosing an HECM or a proprietary reverse mortgage depends on factors such as the borrower's age and their anticipated duration of homeownership. It's crucial for homeowners to carefully evaluate their financial goals and circumstances to determine which option aligns best with their needs.

HECM as the Logical Choice

For older homeowners seeking to tap into their home equity without the obligation of immediate repayment, a home equity conversion mortgage is often the most logical choice. While there are other types of reverse mortgages available, HECMs provide a government-insured option that offers financial security and flexibility for seniors. The HUD limits associated with HECMs make them an attractive choice for borrowers who do not require loan amounts above these limits.

Leveraging the Benefits of HECMs

A home equity conversion mortgage provides a valuable tool for older homeowners to unlock their home equity and secure financial stability. By leveraging the FHA-backed HECM program, eligible homeowners can access the funds they need while retaining ownership of their homes. The flexibility of repayment options, competitive interest rates, and regulatory protections make HECMs an appealing choice for individuals seeking to enhance their financial well-being in retirement. However, it's crucial for borrowers to carefully consider their unique circumstances and consult with mortgage professionals to make informed decisions about utilizing a home equity conversion mortgage.


The main type of reverse mortgage that people get today is the Home Equity Conversion Mortgage, backed by the US Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA).

These reverse mortgages are available to people age 62 or older who are interested in leveraging their home equity to gain liquidity, either in the form of a lump sum, monthly payments, or other arrangement. A Home Equity Conversion Mortgage (HECM) is a reverse mortgage available to homeowners age 62 or older, insured by the Federal Housing Administration (FHA).

It allows homeowners to receive an income stream or lump sum payment as a loan based on their home equity, but allows them to remain in the house and not make further payments on their home if they do not want to.

Repayment of the loan must be made if the borrow or joint borrowers die or sell the house. Effectively it allows elderly Americans to sell their homes without moving out and to simply forfeit the right to pass their home on to any beneficiaries.

The HECM works for homes with values up to $625.

Tickeron's Offerings

The fundamental premise of technical analysis lies in identifying recurring price patterns and trends, which can then be used to forecast the course of upcoming market trends. Our journey commenced with the development of AI-based Engines, such as the Pattern Search Engine, Real-Time Patterns, and the Trend Prediction Engine, which empower us to conduct a comprehensive analysis of market trends. We have delved into nearly all established methodologies, including price patterns, trend indicators, oscillators, and many more, by leveraging neural networks and deep historical backtests. As a consequence, we've been able to accumulate a suite of trading algorithms that collaboratively allow our AI Robots to effectively pinpoint pivotal moments of shifts in market trends.

Disclaimers and Limitations

Ad is loading...