The HECM is a Home Equity Conversion Mortgage. One of its many features is that it is a HELOC that you can draw against. Mortgage payments are optional. The interest can accumulate while the value of the property in most places will increase faster than the interest will accumulate.
The important difference between a HELOC and a HECM is that the HELOC can be topped off, limited so that you cannot draw any more than the current balance. If your line of credit is $200,000, and if you owe $80,000, the lender can terminate your right to borrow the extra $120,000 in credit.
However, with the HECM the full line of credit cannot be “topped off” or limited to what you currently owe.
The HECM is not just a mortgage. It is a multi featured financial instrument designed to make it easier for home owners to retire.
Listen to my partner Martin Andelman on this point:
Sincerely,
James Robert Deal
Real Estate Attorney & Real Estate Managing Broker
James@JamesDeal.com
PO Box 2276 Lynnwood WA 98036
Law Office Line: 425-771-1110
Broker Line: 425-774-6611
(I do not text. Send email)
KW Everett Office Line: 425-212-2007
Fax: 425-776-8081
Flat fee payable at closing.
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