The article delves into reverse mortgages, specifically Home Equity Conversion Mortgages (HECMs), highlighting their advantages and disadvantages. Borrowers can opt for monthly installments or a lump sum, which can be used to finance home modifications or long-term care. The loan is repayable upon death or when the borrower leaves the home for a year. While HECMs allow seniors to tap into their home equity without moving, they come with high closing costs and complex terms. HECMs are non taxable and do not affect eligibility for Medicaid or SSI, offering critical financial freedom for aging homeowners.
"The borrower can spend the loan on anything from long-term care costs to home modifications, but it becomes due when they no longer reside in the home."
"HECM borrowers are protected from owing more than the home's worth due to the loan's nonrecourse feature and FHA insurance."
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