Today, which reverse mortgage product will get your borrower more money?
A.) HECM 100
B.) HECM 150
If you said A, you are incorrect! Right now the HECM 150 has a higher principal limit than the HECM 100 because expected rates on the monthly HECM loans have bottomed out. Our Financial Freedom account executive(thanks Chris!) pointed this out tonight and according to him this is why:
the expected rates have gone so low, and below the HUD tables, the principal limits on the HECM 100, 150 and LIBOR 65 are equal and cannot get any better.
I admit, that when I saw the email I didn’t think it could be true… but it’s. While the rates are slightly higher on the HECM 150 than they are on the HECM 100, the service set-aside is lower on the 150 than the 100. Contrary to what we might guess, a higher expected rate causes the service set-aside to decrease. Take a look at the numbers I ran below if you need more proof.
Interesting huh? I think so… Also, lets not forget that a HECM 150 will help us originators make a little extra money too!