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The Reversing Trend
By
Valerie Thelen, Staff Writer
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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