April 2013 Fixed Rate Reverse Mortgage Demise
The advent of April marked the end of the HECM Standard Fixed Rate product. The moratorium on this product caught many by surprise. According to the FHA this product had a higher rate of default and the hope is that with this change more seniors will be able to stay in their homes.
It is important to note that this is a moratorium, which means that with some adjustments, it is possible it will reappear in the future.
There is a still a fixed rate available with the Fixed Rate Saver. The borrower’s proceeds will be smaller but so are the closing costs. There is no up-front FHA mortgage insurance premium, so saver costs are lower.
The Adjustable Rate Reverse Mortgages still have many viable options for Seniors in their retirement planning.
For instance, Borrowers who don’t need all their proceeds now and only plan on using them in case of emergency greatly benefit from the Line of credit. The overall cost of the mortgage goes down significantly as they only pay interest on what they have used. And the line amount actually increases each year.
There is no option for monthly payments, tenure payments or combination of lump sum and monthly payment with the Fixed Rate Option. They can only receive one lump sum payment and the interest costs start immediately.
I have lots of options for you. Contact me today and I’ll help you find a plan that is right for you.
SUSAN DRAWDY, Your Reverse Mortgage Expert
All California Mortgage
A division of American Pacific Mortgage Corp.
Ca. lic no. 01056199
Company NMLS# 1850
licensed by the Dept. of Business under the CRMLA
Corp BRE# 01056199/01215943