The first article in this series looked at the various reasons many Home Equity Conversion Mortgage (HECM) borrowers make bad choices. One important reason is that they don’t fully understand the longer-run consequences of the various HECM options that are available. That is the subject of this article.
The senior’s borrowing power
The different HECM payment options can be viewed as different ways that seniors can use the borrowing power of their homes. Total borrowing power depends on the property value, the age of the youngest co-borrower, and the expected interest rate and upfront fees on the HECM.