Home Equity Conversion Mortgage
As of the beginning of 2017 the total Reverse Mortgage originations in the United States has past the one million loans mark. The total is 1,011,228! Senior Citizens have benefited from the FHA insured Reverse Mortgage since the program began in 1990.
Although the program has been in existence for twenty seven years, one in four loans has been done in just the past five years. These numbers show how popular the program has become for many senior citizens.
HECM SAVERFHA unveils cheaper reverse mortgage effective Oct. 4 2010
FHA 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 ProgramFHA approved program – effective January 1st, 2009
The 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.