The HECM saver program that will allow you to virtually eliminate the fees associated with getting a reverse mortgage. With so many seniors opting to not do a reverse mortgage because of the fees, this may be just the thing you were waiting for.
HECM stand for Home Equity Conversion Mortgage. any reverse mortgage that is FHA insured is a HECM reverse mortgage. The word Saver is to indicate that the fees are greatly reduced.
This is a program designed by FHA to save the homeowner some of the expense of a reverse mortgage. Most specifically the up front cost. This can enable you to get a reverse mortgage and not be overwhelmed with fees. When you combine this program with a reverse mortgage from a broker who waives origination, this loan is almost a no cost loan.
Most specifically it saves you on the up front mortgage insurance. This charge was 2% of the appraised value of your home, and even though it was usually put in your loan, it was still a hefty charge. For a $400,000 home, it would have cost you $8,000. Now it it virtually waived, and this is the biggest savings since the reverse mortgage program was initiated.
When combined with a low origination fee, you can really get a great deal on your reverse mortgage. Make sure you ask about the money saving options that are available.
This Saver loan does not eliminate the monthly mortgage insurance (MI), only the up front. Make sure you keep these separate so you don't feel as though anyone is trying to trick you. There is up front MI and monthly MI on all FHA loans. the difference here is the up front is waived.
Is it more important to save the up front costs or get more money? I know it can sound confusing, but just because the fees are less, doesn't mean you will have more money available to you. This new program doesn't offer as high of a loan to value as the HECM Standard program.
So if you don't want all the money that is available, then definitely consider the HECM Saver. But if you need to squeeze a few more dollars out so you can qualify, or to get the extra money needed for anything, then maybe we should look into the alternative programs.
Like other reverse mortgage programs, there are both adjustable and fixed interest rates available. Knowing which one is right for you will probably take the help of your trusted loan officer. But the short version is, if you want a monthly check sent to you or a line of credit, you will need to choose the adjustable rate. If you plan on taking all of the money at once, use the fixed rate.