The Home Equity Conversion Mortgage (HECM) is the oldest and most common reverse mortgage and is insured by the federal government through the Federal Housing Administration (FHA). The President's stimulus legislation increased the maximum loan limit to $625,500. This higher limit is only available until the end of the year, so now is the time to look at all your reverse mortgage options.
A unique feature of the HECM loan is the Mortgage Insurance Premium (MIP). This is required by and paid to HUD to insure the mortgagee against losses. HUD also guarantees the borrower their funds will be available if the lender or servicer is not able to make payments.
Generation Mortgage HECM options available for you:
When it comes to understanding Reverse Mortgages, we have the answers and backing you can trust from our controlling shareholder, Guggenheim Partners.
New and Improved Fixed Rate HECM Loan
With a fixed rate loan, you have the peace of mind knowing your rate is set for the life of the loan. Currently, you can get more money with the fixed rate versus the variable rate product.
One important point to keep in mind on the fixed rate product: You must take the entire proceeds/benefit as a lump sum (100% draw). By taking out a lump sum with the fixed rate product, the interest accrues on the entire amount you take out.
Fixed Rate Recap:
- You currently get more money than the variable rate product;
- You must take your money in a lump sum;
- Lowest historic fixed interest rates make the fixed rate product attractive at this time!
In addition, since the interest accrual is known, borrowers will have the comfort of knowing exactly how much they may pass on to their estate.
Standard Adjustable/Variable HECM Rate
On the adjustable/variable rate product, interest accrues only on the money you have taken out (borrowed). The balance can stay in the "Line of Credit" (LOC) plan and what is really attractive about the LOC plan is that the balance grows in your favor. This enables you to request more money from your equity in the future.
Adjustable/Variable Rate Recap:
- You have the flexibility to receive your money in monthly installments, lump sum, line of credit, or any combination;
- Lower rates than fixed rates are currently available;
- You may get less money than with the fixed rate product.
HECM For Purchase Loan
Eliminate rent or mortgage payments and enjoy more cash flow!
Purchase a Home with the FHA-Insured Reverse Mortgage
The Housing and Economic Recovery Act of 2008 creates a tremendous opportunity for anyone, 62 and older, to use the Home Equity Conversion Mortgage (HECM) for Purchase product to buy a home. The maximum FHA loan limit is $625,500, so now is the time to take advantage of this opportunity.
With the HECM for Purchase product, your reverse mortgage proceeds, combined with a large cash down payment, allow you to purchase a new primary residence within a single transaction.
- Own a home
- Upgrade from a current home
- Sell an existing home and downsize to more affordable living
- Relocate to be closer to family
- Purchase a single level, more accessible home
Seniors who would like to purchase a new home and wouldn't normally qualify for a mortgage because of credit issues or fixed income may now be able to do so:
- Typically, no credit or income qualifications
- No monthly mortgage payments
- A sizeable down payment is required
- Homebuyer must be 62 or older
- Federally regulated and insured
- Same reverse mortgage benefits as the standard HECM product
Eligible Properties:
- Single family homes
- 1-4 Units (One must be primary residence)
- Approved Condos & Townhouses
HECM for Home Purchase currently not available in all states
As experienced experts in the industry, we're here to provide all the facts to help you make the decision that is right for you.
Call us toll free today at 1.800.662.1962 to find out how much you may be eligible for with the higher lending limit. Your Reverse Mortgage Professional will carefully answer all your questions.
