HECM
Home Equity Conversion Mortgage
Based on the final totals in the 2010 calendar year, 670,521 Senior Citizens have benefited from the FHA insured Reverse Mortgage since the program began in 1989. Although the program has been in existence for twenty one years, two out of three loans have been done in just the past four years. That total is 425,007 Reverse Mortgages. These numbers show how popular the program has become for many senior citizens in the recent past.
HECM SAVER
FHA unveils cheaper reverse mortgage effective Oct. 4 2010FHA launched a new reverse mortgage called the HECM Saver on Oct. 4, 2010. In exchange for borrowing a lower amount, the HECM Saver charges drastically lower upfront fees. HECM is short for Home Equity Conversion Mortgage, the reverse mortgage program insured by the FHA. The vast majority of reverse mortgages are HECMs.
The new HECM Saver eliminates the upfront mortgage insurance premium, charging just 0.01 percent of a home’s value. On a $200,000 home, that means you’ll pay an upfront premium of just $20. The tradeoff with the HECM Saver is that the amount you can borrow against your equity is between 10 percent and 18 percent less than the FHA’s standard reverse mortgage. Borrowers are also charged mortgage insurance premiums on an ongoing basis equivalent to 1.25 percent annually of the outstanding loan balance.
HECM for Purchase Program
FHA approved program – effective January 1st, 2009The Housing and Economic Recovery Act of 2008 provides seniors with the opportunity to purchase a new principal residence with HECM loan proceeds. The National Housing Act effective January 1st, 2009 authorizes the Department of Housing and Urban Development to insure Reverse Mortgages for the purchase of a 1- to 4-family home. Accordingly, eligible seniors now have the opportunity to purchase a primary residence with HECM loan proceeds. This is an ideal situation for seniors who are downsizing. Call us for more details.
Lending Limits for FHA insured Reverse Mortgages increase $625,000
On February 15th, 2009 the economic recovery bill approved by the U.S. House and Senate changed the single national loan limit for FHA insured Reverse Mortgages at a higher level than $417,000.This change allows seniors with higher home values to receive more money. The higher lending limits have been approved through the end of FY 2012.Latest News
Fast Facts
Reverse mortgages allow you to convert equity in your home into supplementary cash to use whenever, and however, you wish: as a lump-sum, monthly payment or as a line of credit you can tap as needed. The loan does not have to be repaid as long as you continue to live in your home.
The loan is backed and guaranteed by the Federal Government.
The home must be your primary residence.
Title to the property remains in your name.
No income, health or credit qualifications.
You do NOT make monthly payments. EVER!
Cash received is TAX FREE!
You own your home – no different than a traditional mortgage.
Social Security benefits and Medicare are generally not affected by a reverse mortgage – consult your tax advisor.
