Home Equity Conversion Mortgage Program 101

The home equity conversion program is a unique lending tool that is offered by many mortgage brokers. Where a typical mortgage allows you to buy your home's equity over time, the home equity conversion program actually allows the lender to buy your equity from you. This can be a great opportunity for those who qualify for the program. If you are at least 62 years old and own your house you may be able to qualify. Here are some things that you need to know about the home equity conversion program and how it works. 


The home equity conversion program provides several benefits for prospective customers. Here are a few of the more important reasons to get involved in the home equity conversion program.

  • Supplement income- Many senior citizens do not have enough income coming in to support themselves. With the home equity conversion program, you can receive a nice supplement to your income every single month. While it might not be enough to live on, it will help out if you are living on a low, fixed income.
  • Can not be upside-down- With the home equity conversion program, you cannot  get upside down on the loan. The loan caps out at a certain amount with interest. Therefore, it can never exceed the value of the home and leave you in a bad financial position.
  • No time limits- When you are involved in this type of program, you do not have to move out of your house by a certain date. You will be able to live in the house during the repayment period and collect your monthly checks. Then, even after you are paid in full for your portion of the equity, you can still live in the house without making any monthly payments. This gives you a great deal of flexibility, as you can collect the equity money and still live in the house without a payment. 
  • Reasonable interest- The interest rates are very reasonable for this type of mortgage and depend on whatever the prevailing market rate is. 
  • Not credit-based- The bank does not care if you have bad credit or a job. As long as you own your house and you are old enough, they should allow you to use the program.

The Verdict

The main drawback is that it takes part of the inheritance away that you were planning to leave your children. However, you need to live comfortably in your remaining years as well. In most cases, the home equity conversion program is a good idea.