On October 4th, 2010 the Federal Housing Administration (FHA) will offer a new HECM Saver Reverse Mortgage that will reduce fees for may senior borrowers. The tradeoff with the HECM Saver reverse mortgage is that with the lower fees less money will be available to borrow.
Tag Archives: reverse mortgage
Reverse Mortgage Fees
By AMY HOAK
Upfront fees on reverse mortgages have fallen substantially in recent months, giving homeowners interested in this product a new challenge: how to compare offers to find the best one.
Reverse Mortgages Pros and Cons
Read about Reverse Mortgages pros and cons, and check out the resources provided below.
The upsides of reverse mortgages
• You can choose how to receive the money: fixed monthly payment, lump sum, line of credit or some combination of these options.
• Income from reverse mortgage generally does not affect Social Security or Medicare benefits.
• If you “outlive the loan,” meaning you receive more in payments than your home is worth, you will never owe more than the value of the home, according to the Federal Trade Commission, or FTC.
• Loan advances are generally not taxable.
• Most loans do not have income requirements.
• Homeowner retains title to home.
• No payments are due until last surviving borrower dies, sells home or no longer lives in home as primary residence.
• HECM programs allow borrower to live in nursing home or other medical facility for up to 12 months before loan becomes due.
• After the home is sold and the loan and fees are paid to the lender, any remaining equity in the home belongs to you or your heirs.
Cash-Out Refinance
A refinance transaction where the amount of money from the new loan is greater than the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens.
Reverse Mortgages and Long Term Care Insurance
Many people fear getting a reverse mortgage because it will tap into “the last reserve” they have – their home. This is a reasonable concern. If something goes wrong with the homeowner’s health, living in the home may not be an option. Moreover, if that homeowner is well into a reverse mortgage, and the majority of the equity has already been accessed, there can be a need to move into a smaller house or assisted living, and little cash to do it with.
Reverse Mortgage Calculator
A reverse mortgage calculator will show you how much cash you can get if you take out a reverse mortgage. The amount varies based on age, location (each county has a different 203-B limit), and house value/current payoff.
