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The United States Department of Housing and Urban Development (HUD) created reverse mortgages to give seniors the opportunity to access the equity that they have in their homes.
The HECM (Home Equity Conversion Mortgage), also known as a reverse mortgage, pays the homeowner either as a lump sum payment, a line or credit or monthly installments. The loan becomes due when the borrower(s) moves out of the house or dies.
Qualified seniors may purchase a home with a reverse mortgage. A significant downpayment is required. This allows seniors to downsize their home while retaining there independence. As with all reverse mortgage loans, borrower(s) must be age 62 or older.
HUD Reverse Mortgage Counseling Requirement. Before you can complete your reverse mortgage application, you must receive reverse mortgage counseling with a counselor approved by HUD. This step, required by law, is designed to protect you.