Although the fixed rate changes are welcomed, these adjustments are even more welcomed. Although profits and financial rewards are currently higher on fixed rate HECMs, many seniors should not be getting them. A significant group of seniors would be far better off with the variable rate product.rnrnUnfortunately too many originators do not recognize which product is better for the senior. We like leaving the decision up to the seniors; however, they do not know the product and because too few originators have ever had a HECM, they are sort of lost in the selection criteria decision tree.rnrnAtare Abgamu had a great article in the Reverse Review on the use of HECMs in business. Unfortunately he merely scratched the surface. Like all HECMs, their main benefit is found in cash flow to the borrower. It is this characteristic that should be explored with the senior and how paying down the line of credit has few negatives and many positives. On the other hand paying down a fixed rate HECM is probably not the best idea even though it would say costs.rnrnToo many times I have attended seminars where the loan originator goes on and on about the unique growth feature of the HECM line of credit. Unfortunately the presenter rarely provides examples of how a line of credit may be preferable to closed end HECMs. There is little doubt more seniors would get HECMs if they understood how the line of credit works.rnrnGood job Bank of America in driving down the cost of a adjustable rate HECM.

Although the fixed rate changes are welcomed, these adjustments are even more welcomed. Although profits and financial rewards are currently higher on fixed rate HECMs, many seniors should not be getting them. A significant group of seniors would be far better off with the variable rate product.

Unfortunately too many originators do not recognize which product is better for the senior. We like leaving the decision up to the seniors; however, they do not know the product and because too few originators have ever had a HECM, they are sort of lost in the selection criteria decision tree.

Atare Abgamu had a great article in the Reverse Review on the use of HECMs in business. Unfortunately he merely scratched the surface. Like all HECMs, their main benefit is found in cash flow to the borrower. It is this characteristic that should be explored with the senior and how paying down the line of credit has few negatives and many positives. On the other hand paying down a fixed rate HECM is probably not the best idea even though it would say costs.

Too many times I have attended seminars where the loan originator goes on and on about the unique growth feature of the HECM line of credit. Unfortunately the presenter rarely provides examples of how a line of credit may be preferable to closed end HECMs. There is little doubt more seniors would get HECMs if they understood how the line of credit works.

Good job Bank of America in driving down the cost of a adjustable rate HECM.

Updated post to reflect a rate of 5.56%, there was a typo which said the fixed rate was 5.65%.