Through an informational video in its online coverage at CNNMoney.com, discusses reverse mortgages and introduces the HECM Saver to viewers and readers who might not be familiar with the newer product.
In CNN’s “Ask the Expert” segment, Money Magazine’s Walter Updegrave covers the basics in a review of the HECM Standard, identifying pros, cons and several drawbacks including the initial insurance premium equal to 2% of the home.
With regard to the 2% insurance premium, “Although you don’t have to pay this charge out of pocket,” Updegrave says in the video, “it does raise the overall rate of borrowing, and can make the effective interest rate you pay astronomical if you end up drawing very little against your reverse mortgage, or if you die or move from your home shortly after taking out the loan.”
The video also covers the HECM Saver, noting the substantial difference in insurance premium between the Standard and the Saver. “That lower upfront cost makes a reverse mortgage loan potentially more appealing if you are planning to use it sparingly, perhaps as a backup line of credit or an emergency fund, or if you think you might not stay in your home very long,” he says. CNN notes that if you need a larger loan, the Standard is the better choice.
See the video here.
Written by Elizabeth Ecker