The Chicago Sun Times is reporting that when the Federal Housing Administration created new rules for reverse mortgages, it opened up the door for additional opportunities and lower cost loans through the HECM Saver program.
Sun Times columnist, Terry Savage writes “Now that most lenders have launched these new products, it’s worth an updated look.” Savage has been a big supporter of the product, which she describes as:
Basically, you are just borrowing from yourself — although you will be paying interest on that loan. But the interest is added to the amount of equity taken out of the home. When you sell the home, or die, the amount you have borrowed out of your home’s equity must be repaid from the sale proceeds.
Importantly, you — or your heirs — can never owe more than the home is worth. And you can never be forced out of your home because you’ve “run out” of equity. Eventually, when the home is sold, because you move or die, any proceeds (minus the withdrawals, interest and fees) are returned to you, or your heirs.
If that sounds too good to be true, this is the one product that really is as good as it sounds — if you understand all the details and costs.