HECM Changes August 2013

Within the past week major changes have come about the reverse mortgage industry within the United States. Legislation in congress has adjusted the "Home Equity Conversion Mortgage Program" otherwise known as the reverse mortgage. This has been in the balance for some time now as a means of changing consumer perception of the type of loan. Over the past few years the perception has been if there is a default on a reverse mortgage, the borrower will be eliminated from the home and dive deeper into financial crisis. The main goal during talks in Washington has been strengthening borrower protection.

            

In order to increase borrower protection from loan companies, background checks will make it much harder to qualify for reverse mortgage loans and prevent borrowers from being booted from their homes.  For these changes to seamlessly occur, a strict financial assessment will take place as a means of protecting lender from defaults. This change will also set limits on on the amount borrowed and withhold capital to cover property taxes and homeowner insurance. Another major change involves surviving spouses of borrowers being protected from eviction.  With these changes set to take place as early as October 1st, 2013 the public perception is bound to change the industry and create a positive outlook for both borrowers and lenders.

For more information you can contact us at 888-866-8152, email us at info@reversemortgagela.com, or visit our site at www.reversemortgagela.com.

Is a reverse mortgage right?

Are you over 62? Have you been wishing you had a way to access your home equity?  Have you considered a reverse mortgage?  If you are happy with your current residence and not planning to move again, strongly consider reverse mortgage.  The extra cash allows you to get the most out of your retirement.  Spend time traveling, entertaining family, and spoiling your grandchildren.  

Today’s home ownership is rarely the investment that you expected it be when you first bought, but that doesn’t mean that it should only be a slow monthly drain on your income and savings.  Loan companies specializing in reverse mortgage make the process simple and straightforward, allowing you to access your equity.  The boost in cash on hand can let your retirement resemble what you had hoped it would be when you started saving. A reverse mortgage has historically been sought to pay off a current mortgage, initiate a home improvement project, or cover health care.  The truth is, that money is yours and it can be used at your discretion.  A recent homeowner just returned from a trip throughout Europe, a trip he and his wife had hoped to do ever since they met 40 years ago.  He also sent his granddaughter to soccer camp and joined a gym himself.   

There are different types of reverse mortgage loans, similar to conventional mortgages, including a fixed-rate (known as the Standard Fixed Rate HECM), a lower-cost, fixed-rate mortgage (the “Saver” plan) and a variable-rate mortgage. However, this year the FHA eliminated Standard Fixed Rate HECMs, which have higher upfront fees and more generous loan amounts.1  Instead, the FHA now only allows “Saver” plans for fixed-rate mortgages, which charge lower fees but offer 10 percent to 20 percent less payout than standard mortgages.

Make sure your reverse mortgage lender explains all of your financial options when seeking a loan.  They need to disclose information about the financial implications of a reverse mortgage.  Because a reverse mortgage is a huge investment of assets it is important to seek a qualified lender with a good track record of guiding clients through the process.  Online reverse mortgage calculators can help you get an idea of how valuable a reverse mortgage loan may be to you.  In today's economy they are undoubtedly a valuable option for homeowners.

For more information you can contact us at 888-866-8152, email us at info@reversemortgagela.com, or visit our site at www.reversemortgagela.com.