HECM

HECM can be an attractive option for a senior interested in pre-paying their mortgage balance's.

Consider a Senior who has limited refinance options available that has an existing lien with a high cost of credit.  Consider a Senior who has a substantial fully amortized long term mortgage balance that was recently originated. Seniors in these types of situations and more may be able to reduce their balance faster pre-paying a HECM.  

Not only can they likely reduce the balance faster they also provide themselves with future credit availability with the same flexible terms.  Future credit availability that is non-taxable. Future interest that is still tax deductible when paid.   

These types of loans have a bad reputation for a lot of bad reasons.  You tell me below....where is it different than any other note securitized to a primary residence?  If there's a balance , it has to be paid.  You don't have to allow interest to compound in Reverse, that's a choice and one that can make sense in some cases.  

The other point to consider in today's mortgage market is cost. Traditional Government Mortgage products are more costly than the HECM.  HECM's don't require funding an Escrow account lessening overall settlement fee's.  The lender fee's outside of possible origination are nominal.  Annual Mortgage Insurance is less & the Upfront Mortgage Insurance can be much less if utilizing the HECM Saver program.  Otherwise it's only 25 basis points more. 

HECM needs more serious consideration and market penetration shows that to be the case.  There are many Seniors who at a minimum need to consider this program.