This week, only Treasury-based HECM’s with a margin of +269 or less can pay the HECM maximum Principal Limit. Ditto for LIBOR-based HECM’s with margins of +256 or less. Current margins are higher than these figures. This week fixed-rate HECM’s range from 5.56% to 7.250% so we explore the range of benefits.
Using this week’s rates, the first table shows max rates or margins before the next drop in the Principal Limit factor. The percentage drops in the table are for a 74-year old borrower (the HECM average). A 5.81% fixed-rate HECM gives 3.0% less than the maximum HECM benefit. A 5.93% fixed-rate HECM would give 4.4% less.
To be equivalent to a 5.81% fixed-rate HECM, a Treasury HECM would need a margin equal to or below 2.94%. Another example — to be equivalent to a T+300 HECM, a LIBOR HECM would need a margin equal to or below 2.93%.
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I am unclear as to how the fixed rate can vary so much from one lender to the other. Our fixed rate is 6.75% and I thought all lenders were on the same page with that. A fixed rate of 5.56% is significantly better.
I agree with John, our fixed rate is 6.75% can someone explain how this rate varies from lender to lender.
Why are you showing the Fannie Mae product? I thought this was cancelled months ago when the lending limit was raised to $417K