Real Estate Glossary

What is Home Equity Conversion Mortgage?

A Home Equity Conversion Mortgage (HECM) is a type of reverse mortgage that allows homeowners who are 62 years of age or older to convert a portion of the equity in their home into cash. This cash can be used for any purpose, such as supplementing retirement income, paying for healthcare expenses, or making home improvements. Unlike a traditional mortgage, where the borrower makes payments to the lender, with a HECM, the lender makes payments to the borrower. These payments are based on the value of the home and the borrower's age and can be received as a lump sum, a line of credit, or a combination of both.