Reverse Mortgage Program Offers Savings For Seniors
Seniors will be able to save with a new reverse mortgage product from the FHA.
The Home Equity Conversion Mortgage Saver is designed to lower upfront closing costs for smaller loan amounts. The HECM Saver will charge an initial upfront mortgage insurance premium of 0.01 percent of the loan amount, compared to the 2 percent insurance premium reverse mortgage, HECM Saver, HECM reverse mortgage of FHA's standard reverse mortgage program, known appropriately as the HECM Standard.
Both reverse mortgage products [http://www.totalmortgage.com/home-loans.asp?campaign=goarticles] will entail annual insurance premiums of 1.25 percent of the loan amount.
Reverse mortgages [http://www.totalmortgage.com/reverse-mortgage.asp?campaign=goarticles] allow seniors to convert their home equity into cash. Reverse mortgages can be a line of credit or a single upfront payment, but unlike traditional home equity loans they don't require monthly payments. Although the FHA makes an exception if the homeowner fails to upkeep the home, the reverse mortgages are paid off only when seniors moves out of their homes.
HECM loans have been criticized for having high fees, a disadvantage the FHA hopes to address with the HECM Saver, said FHA Commissioner David Stevens.
In one disadvantaged, the HECM Saver will not allow home owners to borrow as much against their homes, about 10 to 18 percent less, than the standard program. How much seniors can borrow depends on their age and the value of their homes, with mortgages capped at $417,000 and $729,750 in high-cost areas.
To get a reverse mortgage, homeowners must be at least 62 years old and have either no mortgage or only a small balance remaining. They also have to meet with a HUD-approved housing counselor to discuss the home loan and possible alternatives.
The HECM Saver will increase the use of reverse mortgages. More seniors are tapping their home equity as the population ages. The number of reverse mortgages increased from about 6,600 in 2000 to over 112,000 in fiscal year 2008, according to the nonprofit National Council on Aging. The proportion of seniors with some type of home loan, mostly conventional mortgages or a home equity lines of credit, grew from 24 percent in 1999 to 32 percent in 2007.
The Home Equity Conversion Mortgage Saver is designed to lower upfront closing costs for smaller loan amounts. The HECM Saver will charge an initial upfront mortgage insurance premium of 0.01 percent of the loan amount, compared to the 2 percent insurance premium reverse mortgage, HECM Saver, HECM reverse mortgage of FHA's standard reverse mortgage program, known appropriately as the HECM Standard.
Both reverse mortgage products [http://www.totalmortgage.com/home-loans.asp?campaign=goarticles] will entail annual insurance premiums of 1.25 percent of the loan amount.
Reverse mortgages [http://www.totalmortgage.com/reverse-mortgage.asp?campaign=goarticles] allow seniors to convert their home equity into cash. Reverse mortgages can be a line of credit or a single upfront payment, but unlike traditional home equity loans they don't require monthly payments. Although the FHA makes an exception if the homeowner fails to upkeep the home, the reverse mortgages are paid off only when seniors moves out of their homes.
HECM loans have been criticized for having high fees, a disadvantage the FHA hopes to address with the HECM Saver, said FHA Commissioner David Stevens.
In one disadvantaged, the HECM Saver will not allow home owners to borrow as much against their homes, about 10 to 18 percent less, than the standard program. How much seniors can borrow depends on their age and the value of their homes, with mortgages capped at $417,000 and $729,750 in high-cost areas.
To get a reverse mortgage, homeowners must be at least 62 years old and have either no mortgage or only a small balance remaining. They also have to meet with a HUD-approved housing counselor to discuss the home loan and possible alternatives.
The HECM Saver will increase the use of reverse mortgages. More seniors are tapping their home equity as the population ages. The number of reverse mortgages increased from about 6,600 in 2000 to over 112,000 in fiscal year 2008, according to the nonprofit National Council on Aging. The proportion of seniors with some type of home loan, mostly conventional mortgages or a home equity lines of credit, grew from 24 percent in 1999 to 32 percent in 2007.