What Is The New Reverse Mortgage Called Hecm Saver
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 - Mortgage insurance is mandatory on all FHA loans, and this includes reverse mortgages. The two versions of mortgage insurance are monthly and upfront. In this article we will deal with the latter. Traditionally, the upfront MI is 2% of the appraised value of the home, so if your home was worth $400,000, it would cost you $8,000. With the new program you save this fee, because it is waived.
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.
Prior to the current loan programs and changes in the industry, you may have found yourself paying upwards of $20,000 for a reverse mortgage. But now, most or all of the fees are gone or waived, so you have access to this money. I think the name HECM Saver is a good fit because it does save you quite a bit of money compared to the old program, making a reverse mortgage a very affordable loan.
by: David Prulhiere