Reverse Vision rolled out software updates that allow customers to run scenarios for the new HECM Saver and the updated principal limit factors, but it also released a new tool that visualizes how the changes will impact borrowers.
Using the borrowers age, the tool graphically compares the updated principal limit factors to the old factors as well as the new HECM Saver.
Despite lower principal limit factors starting October 4, 2010, the Department of Housing and Urban Development is lowering the effective interest rate floor from 5.50 to 5.00 percent. Because interest rates are so low, many reverse mortgage borrowers will receive more money than previously available.
According to Reverse Vision, the HECM saver pays roughly the same amount as a HECM standard with an interest rate 1% higher. For example, the HECM Saver with a 5% rate provides about as much proceeds as a HECM Standard of 6%. For a 62 year old borrower, a 5% HECM Saver will offer a principal limit that is just about 7% below the one of a current HECM.
To use the tool, see here.