Several months after the FHA’s launch of its new HECM Saver mortgage insurance premium option, the Washington Post reported on its appeal of the Saver in offering a much lower startup cost than that of traditional reverse mortgages.
“It opens up new options for people to think about in terms of how they tap their equity as a retirement resource,” Barbara Stucki, vice president of home equity initiatives at the National Council on Aging, told The Post. Rolled out in October 2010, the Saver allows borrowers to spend much less in startup fees. On the flip side, the total amount that can be borrowed is less. With the Saver, the borrower will pay .01 percent of the home’s value in upfront insurance premiums, just a fraction of the 2 percent he or she would spend on traditional reverse mortgage premiums.
Depending on the borrower’s age, the total amount that can be borrowed is between 10 percent and 18 percent less than under a traditional HECM.
Additionally, many private lenders have lowered or completely waived origination fees, Peter Bell, president of the National Reverse Mortgage Lenders Association told The Post. This is due to the premium investors are paying for reverse mortgage-backed securities, he explained.
Read the full article here.
Written by Elizabeth Ecker