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The Reversing Trend

By Valerie Thelen, Staff Writer

(Page 3 of 4)

Newest option

In September 2010, the Federal Housing Administration unveiled a modified version of the traditional reverse mortgage. The new HECM Saver was developed to lower the upfront costs associated with a reverse mortgage.

FHA Commissioner David Stevens said in a recent interview: "Despite the popularity of our HECM loan product, we have noted concerns that some senior citizens find that our fees are too high for them. In response, we created HECM Saver which will provide seniors with a reverse mortgage option that significantly lowers costs by almost eliminating the upfront Mortgage Insurance Premium (MIP) that is required under the standard HECM option."

This may not be the best option for homeowners wanting to receive the most possible dollars from a reverse mortgage if they need to pay off existing debt; but for those who have allocated only a portion and want to save the rest, it is a good opportunity.

As with the Standard, the money is advanced to the homeowner and interest accrues, but nothing is due until the homeowner dies, leaves or sells the property. If the loan balance exceeds the value at that time, FHA pays the difference.

Action Plan

If a reverse mortgage sounds appealing, there are steps to take in the process. The National Reverse Mortgage Lenders Association (NRMLA) takes a homeowner through this plan on its Web site.

First, homeowners need to have awareness about the possibility of a reverse mortgage and seek out information.

Second is education. The NRMLA suggests contacting a lender to learn more and have all questions answered.


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