HECM Fixed Standard - main features

• fixed interest rate
• upfront lump sum ( not taxed )
• upfront mip 2%
• pay interest on full lump sum

Designed for seniors who want or need the maximum amount of equity out of their homes and are also interested in a fixed rate HECM. You will pay the full 2% upfront mortgage insurance and some lenders will work with you on eliminating origination fee on the loan.

Currently many seniors who have a first mortgage or large liens against the home are utilizing the HECM Fixed to pay off their existing debts, improve their retirement cash flow by getting rid the debt payments, while this is a costly option it works very well for many seniors ( specially when taking home appreciation and offset savings from higher interest mortgage loans.)

HECM Adjustable Standard - main features

• adjustable interest rate
• select how receiving the income/funds ( credit line, monthly income )
• upfront mip 2%
• pay interest on amount borrowed only

seniors who also want the full equity out but do not mind taking an adjustable rate mortgage option which has lower interest rates due. You will also be liable for the 2% upfront mortgage insurance which goes into the loan costs, lenders will most likely charge an upfront origination fee of 1-2%.

The lower adjustable rates can come in handy when you need some new income/funds in your retirement and have plans to sell the home in a few years. Seniors can also look at this option to pay off an existing mortgage as the adjustable rates are very low right now.

HECM Saver Fixed - main features

• receive a lump sum upfront
• not taxed ( never taxed )
• upfront mip .01% (substantial savings )
• pay interest on full amount upfront
• less equity available compared to HECM standard

pay less in upfront mortgage insurance (.01%), receive a smaller portion of the homes equity and get into a fixed rate option – this is usually utilized by seniors who have a substantial amount of equity in the home – money will come as a credit line or as monthly income ( or combination).

HECM Saver Adjustable -

• receive credit line or monthly income
• not taxed ( never taxed )
• upfront mip .01% (substantial savings )
• pay interest on borrowed portion only
• less equity available compared to HECM standard programs

dont mind an adjustable rate mortgage or receiving less of your homes equity – also utilized by seniors with more equity in the homes – this can be one of the cheapest options of the HECM loans as the interest rates for the adjustable programs are the lowest – mortgage insurance is also (.01%) thus savings is realized with this option.

Reverse Mortgages How They Work

The reverse mortgage loan allows seniors just like you take out a portion of their home’s equity in order to have a more comfortable retirement. Whether you need to pay off some medical bills, eliminate the mortgage, or simply want to start your retirement adventure the reverse mortgage will allow you to achieve your goals.

Your equity is currently sat there in your home, meanwhile home prices and equity investments have only gone south, we understand that the current economy putting pressure on your retirement, with having access to your equity this should improve your life-style.

With a reverse mortgage you are able to:

• Release equity from your home (up to roughly 60-75% – the older you are the more you can take out)
• Live in your home for the rest of your life
• Never have another mortgage payment
• Have flexibility as to how you receive this new found money ( you can receive a lump sum, monthly income, or you can get a credit line )
• keep ownership of the property
• alleviate from the debt or stresses that debt may be causing

You are still responsible for the property taxes and insurance for your home.

Who Can Qualify For a Reverse Mortgage?

Qualifying for a reverse mortgage is based on 4 requirements – if you meet these 4 factors you will be able to qualify for a HECM reverse mortgage

First point to mention there are no credit checks or income requirements to qualify

if you are interested in a manufactured home reverse mortgage

Lets go through the 4 steps to qualify

First requirement: the youngest borrower has to be 62 years or older ( if you are 60 days from your birthday we can start the process )

Second requirement: you must have equity in the property – equity is simply the difference between what you owe and the amount the home is worth: so to give an illustration if your home is worth $200,000 and you currently owe $50,000 then you have $150,000 in equity

Third requirement: this must be your primary residence – this means you must live in the home and it cannot be a second property or an investment property

Fourth and last requirement to qualify for a reverse mortgage is:  you cannot have defaulted or paid late on any form of government debt – if you are behind on your government loans you will not qualify for the reverse mortgage

There are more pros than cons - for a complete overview visit HECM reverse mortgage pros and cons.

Many seniors are not familiar with the HECM reverse mortgage, the program is not new and has been out in the market for more than 3 decades. For a very long time it has been negatively viewed in the media for it high closing fees but with the government insuring the program there has been many changes including the introduction of the HECM Saver.

Pros

• access to your home's equity without having to sell, move, or make monthly mortgage payments
• receive income from your equity - you select how between a lifetime monthly income, credit line. or lump sum option
• never make another mortgage payment - pay off your existing mortgage
• can leave home to heirs (and since you can only borrow a portion of your equity they will be able to inherit equity)
• any current or future equity belongs to you - the bank does not own the home
• flexibility in how you receive payment and ability to change method of receiving payments
• no income or credit check unlike a home equity loan or home equity line of credit
• non-recouse feature which protects you and your heirs from paying back the loan if the balance is negative ( your home is worth less than home - FHA insurance will pay bank)

The cons

• it is a mortgage loan - even though you dont make monthly mortgage payment this is still a mortgage, the amount is added back each month - but no payment is due - the balance increases with time ( to offset this though your home's value will increase)
• less equity will be available for your equity since you will use a portion of this equity to increase your retirement quality be taking out a portion

How much money will I receive with my reverse mortgage loan? How much Can I get and how is this amount determined?

Head over to our free reverse mortgage calculator

The amount of funds is dependent on how old you are, how much equity you have available, and your retirement plans.

1.) Age - you have to be at-least 60 days before your 62nd birthday to start the HECM reverse mortgage process, the older you are the more equity (the higher the % of equity) will be available for you to take out with your HECM.

2.) Equity available - lets first cover a simple example to demonstrate what is equity and how to calculate the equity you have available.

If your home is worth $200K and you currently have a mortgage on it for $100k then you have $100K in equity or 50% LTV (loan to value). The more equity you have available than the easier it is to qualify, the reverse mortgage loan has a loan limit of $625K so if your home is worth $2 million than the $625K is still the maximum amount which the loan ratios will be based on (this is with every bank - this is the FHA loan limit).

3.) Your personal retirement plans - what are you trying to achieve? do you want to travel, do you need to generate new income or do you want to take a lump sum to improve your home or retirement lifestyle. Your goals are important so think about what your retirement should be like and if that vision is realistic then consider how a reverse mortgage will help you get there.