The acronym “HECM” is associated with a Home Equity Conversion Mortgage. The term reverse mortgage is more commonly used when describing this type of mortgage. Reverse mortgage is definitely a much easier term to remember because it basically describes how the mortgage actually works.
A reverse mortgage is a loan against your home that you do not have to pay back for as long as you live there. The loan can be paid to you in a variety of flexible ways - in a lump sum or in regular monthly payments. The money doesn’t have to be repaid (along with interest) until you die, sell the home, or permanently vacate the house. The equity a borrower has in a home grows smaller over time rather than growing larger. It’s the reverse concept of a traditional home loan. This is obviously why the loan is called a HECM or reverse mortgage.
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