Cash In On Senior Equity

Use HECMs to supercharge your success

Cash In On Senior Equity
RICP®, HECM/Reverse Mortgage Lending

What the heck is a HECM?

An HECM is insured by FHA, available to eligible homeowners aged 62 and older. It allows seniors to tap into a portion of their home equity, converting that into usable proceeds without the need to sell the home. These proceeds can be disbursed in several flexible ways:

  • A lump-sum initial draw at closing
  • Monthly payments to the borrower
  • A line of credit that can be accessed as needed
  • Or a combination of these options

Unlike traditional home loans, an HECM doesn’t require monthly mortgage payments. Borrowers remain responsible for property taxes, homeowner’s insurance, and maintenance, but the elimination of the monthly mortgage payment can significantly alleviate financial pressure.

The HECM is particularly versatile, as borrowers can adjust their payment plan at any time to suit changing circumstances, although a $20 fee is charged by the servicer for each change. And with a Maximum Claim Amount (i.e., home value cap) of $1,209,750 for 2025, it’s a robust option for many senior homeowners.

Why is this important?

One of the top financial regrets for older Americans, according to researchers Hurwitz and Mitchell, is not saving enough for retirement. For seniors on a fixed income, unexpected expenses — such as medical bills, home repairs, or the loss of a spouse — can be overwhelming. The struggle to make ends meet can lead to hard decisions about cutting back on essential needs or spending savings they hoped to preserve.

This is where the HECM becomes a lifeline. It’s not just about tapping into home equity; it’s about providing financial security, peace of mind, and enabling seniors to live the retirement they deserve in the home they love.

Wouldn’t you love to be the person who provides that kind of solution to your clients?

Making a difference: Mary's story

I vividly remember sitting with Mary, an 82-year-old homeowner, to discuss how an HECM might benefit her. As we talked, it became clear that her struggles extended beyond just financial challenges. Since her husband’s passing, Mary had been living on a single Social Security check, and the financial strain was weighing heavily on her.

With most of her income going toward rising healthcare costs and home expenses, she had little left to enjoy life. She loved her home of 45 years, where she had raised her children and now watched her great-grandchildren play in the yard, but staying in the house was becoming more difficult. Mary was also battling loneliness, as many of her lifelong friends had passed away.

As we talked, I asked if she had considered getting involved at her local senior center. She hesitated, saying, “The people there are too old for me.” I couldn’t help but smile and replied, “That’s exactly why they need you! You could volunteer and make such a difference in their lives — and it would get you out of the house, too.”

I gave her information on local programs, including a service that connects volunteers with homebound seniors. My mother had developed a meaningful friendship through a similar program, and I thought Mary would thrive in it.

Fast forward a few months after Mary decided to move forward with an HECM, she called to thank me for all my help. Not only had the HECM relieved her financial stress, but she had also started volunteering at the senior center. She had made new friends, found a renewed sense of purpose, and was even visiting two homebound seniors each week. Her financial freedom allowed her to consider purchasing a new swing set for her great-grandchildren — a joyful milestone she had long dreamed about.

While I helped Mary alleviate her financial burden with an HECM, what touched me most was seeing her rediscover a sense of purpose and community. This is what drives my passion for this product — helping seniors not just survive but thrive.

Volunteering and staying resourceful are values I hold dear. It not only helps me stay informed about the resources available to my clients, but also provides a platform to raise awareness about HECMs. It’s a way to show that HECM professionals are genuinely dedicated to improving the lives of seniors.

When was the last time you felt the deep satisfaction of making such a meaningful impact?

HECMs for seniors

What are the benefits?

The benefits of an HECM extend far beyond immediate financial relief. Here’s how this powerful tool can transform your clients’ lives:

  1. Stay in their home — Seniors can remain in the home they love without the burden of monthly mortgage payments.
  2. Eliminate their current monthly mortgage payment — They still need to cover property taxes, homeowners’ insurance, and maintenance costs, but eliminating the monthly mortgage payment can provide enormous relief.
  3. Access home equity — Homeowners can finally make their hard-earned equity work for them, using it as a valuable resource during retirement.
  4. Easier qualification — There’s no FICO score or debt-to-income ratio required for qualifying, which may make it more accessible than traditional mortgage products.
  5. HECM for Purchase — Seniors can use a HECM to buy a new primary residence, contributing only a portion of the purchase price and freeing up savings for other needs.

Eligibility and requirements

To qualify for an HECM, borrowers must meet several key criteria:

  • Age: Borrowers must be at least 62 years old.
  • Counseling: The borrower is required to undergo HUD-approved counseling to ensure they fully understand the program.
  • Financial Assessment: Lenders perform a financial assessment to determine if the borrower has sufficient income and residual funds to cover ongoing property charges.
  • Property Standards: The home must meet FHA property standards, which ensures it’s safe and well-maintained.

Repayment

Repayment is required when the borrower(s):

  • Pass away
  • Move out of the home
  • Sell the property

Reverse mortgages for younger seniors

In addition to HECMs, Reverse Mortgages are available to those 55 and older in many states. These loans can be structured similarly to HECMs, but with loan amounts up to $4 million and no FHA insurance. While these products follow similar guidelines, they offer more flexibility for higher-value homes and younger borrowers.

HECM for purchase: Tom's story

As more seniors right-size or move closer to family, the HECM for Purchase (H4P) is gaining popularity. Take Tom, for instance, a 70-year-old who sold his home to move closer to his children and grandchildren. He netted $500,000 from the sale of his primary residence but didn’t want to use the entire amount to buy his new home, valued at $500,000.

Through the H4P program, Tom was able to use $169,209 in HECM proceeds toward the purchase, contributing only $330,791 of his own funds. This left him with $169,209 to use during retirement, and he now enjoys his new home without a monthly mortgage payment (aside from property taxes, homeowners’ insurance, and HOA/Condo fees, if applicable)*.

*For illustration purposes only.

Why should you offer HECMs and reverse mortgages?

By offering HECMs and Reverse Mortgages, you can open new doors for both your business and your referral partners. Here’s how:

  • For Realtors — An HECM for Purchase may help them sell more homes, maybe even at a higher price, since seniors may be able to afford to buy homes without liquidating all their assets.
  • For Financial Planners — These loans may boost assets under management, as clients can preserve their savings and use home equity to enhance their retirement plans.
  • For You — Expanding your offerings with HECMs allows you to serve a wider audience, especially in the growing senior market. And there’s nothing more rewarding than making a profound impact on someone’s quality of life.

The difference we can make as women

As women, we bring a unique perspective to working with seniors. We’re often more empathetic, more in tune with their needs, and more driven to make a real difference. By connecting seniors with products like HECMs, we can provide not just financial solutions, but emotional and practical support that transforms lives.

Final thoughts

As you can tell, I’m incredibly passionate about helping seniors through HECMs and Reverse Mortgages. These products are powerful tools that allow seniors to enjoy their golden years with financial stability and peace of mind. If you’re not offering them yet, now is the time to consider adding them to your portfolio.

Because at the end of the day, it’s about how many seniors we can help — and that makes all the difference.

Stay tuned for HECM and Reverse topics and tips in the upcoming MWM ongoing column section.

This article was originally published in Mortgage Women Magazine, during the week of January 2025.
About the author
RICP®, HECM/Reverse Mortgage Lending
Susan A. Pomfret, RICP®, HECM/Reverse Mortgage Lending, USA Mortgage
Published on
Jan 14, 2025
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