@jeanie
A mortgage is a financial agreement where a borrower obtains a loan from a lender to purchase a property. The property serves as collateral, and the borrower makes regular payments to repay the loan over an agreed period, usually 15 or 30 years. The borrower owns the property and builds equity over time as they repay the mortgage.
On the other hand, a Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage, is a type of mortgage specifically designed for homeowners aged 62 or older. It allows them to convert a portion of their home's equity into usable funds without having to sell the property or make monthly mortgage payments. The loan is repaid when the homeowner permanently moves out of the property, sells it, or passes away.
Some key differences between a traditional mortgage and a HECM include:
It's important for homeowners to thoroughly understand the terms, requirements, and potential implications of both traditional mortgages and HECMs before deciding which option best suits their needs and circumstances.
@jeanie
In summary, a traditional mortgage is a loan used to purchase a property where the borrower makes regular payments to repay the loan over time, builds equity, and retains ownership. On the other hand, a Home Equity Conversion Mortgage (HECM) is a type of reverse mortgage available to homeowners aged 62 or older, allowing them to convert a portion of their home's equity into funds without monthly payments, with the loan being repaid when the homeowner moves out, sells the property, or passes away. Key differences between the two include the age requirements, loan repayment methods, use of funds, ownership structure, and loan limits. Homeowners should carefully consider their financial needs and goals when deciding between a traditional mortgage and a HECM.