@MDM - that's right. It's our understanding that she can pay as much or as little as she wants. The drawback, of course, is that if she pays nothing then the bank will eventually own all the equity of the house, to be surrendered when she no longer lives there. The payments, though, are pretty low compared to what they are for her current mortgage, so the upside is that each payment for the HECM would pay more to principle. She pays 1200 now on a 30 year fixed, and the HECM will have a break-even of $639/month for an adjustable @ 2.9% (just interest and mortgage insurance). So, that means that if she maintains a 1200/month payment, roughly 600 of that goes to principle every month, right off the bat. The math suggests that it's worth it.

I think what you're saying is that the system for calculating payments is exactly the same between HECM and traditional. It's just that the traditional actually splits up the costs (e.g. "minimum" payments) in a way that spreads the loan out over 30 years. I still don't understand why the $1200/month payments wouldn't pay down the two types of loans at the exact same rate if both of the APRs were the same. Yet, I'm told that it would be much faster with the HECM.

Confused.

Thanks.