The reverse mortgage world has been turned upside down again with new rules and programs. The HECM Saver Reverse Mortgage has been introduced to save homeowners money by eliminating the upfront mortgage insurance (PMI).
Over the past several months, the fees on a reverse mortgage have been steadily decreasing. So if you were shopping and unhappy with how much it was going to cost, it is time to take another look. The new program called the HECM Saver has now all but eliminated the fees. Let’s compare the fees from what they were to what they can be now.
Mortgage insurance – All FHA loans, including reverse mortgages, have mortgage insurance (MI). There are two types, upfront and monthly. In this article we are going to deal with the upfront. Prior to October 4, 2010, the fee was 2% of the value of your home. Now it is waived. If your home appraised for $400,000, you would have paid $8,000 in the upfront MI. So voila, $8,000 were just saved in upfront costs to a reverse mortgage.
Origination – The most you could be charged for an origination fee was $6,000 (this assumes a $400,000 appraised value). For months now, we have been able to waive your origination fee, because the lenders pay us to do the loan on their behalf.
Service Charges – Most reverse mortgages had a service fee of at least 30 dollars a month that was pre-collected and called a service set aside fee. This was about $4,000 to $5,000, depending on how old you are. Currently, most of the reverse loans do not have a service fee, so this allows you access to the set aside fee.
Let’s summarize how much you could save if your home was worth $400,000. Prior to all these changes, you would have paid upwards of $20,000 to get a reverse mortgage. But now that these fees are gone, this is money you can have access to. So the name HECM Saver fits, because it actually does save you significant money, and makes the reverse mortgage process much more affordable.
Is the the HECM Saver is the correct option for you. While you could save money, do you get the correct benefit, or is there a better reverse mortgage option out there for you?
|
|