Government Reverse Mortgages (HECM)
When looking for a government reverse mortgage, borrowers have to keep many different things in mind. The government reverse mortgage differs from a forward mortgage in that the borrower makes no monthly payments to retire the loan, rather, the mortgage pays the borrower. So the information most people look for on their government reverse mortgage is most often related to the costs, the amount of money they will receive, the margin they have to pay (which affects their interest rate and the amount of money they can receive) and the service they can get from their originator. Typically, when borrowers begin seeking information about a government reverse mortgage, they look at the bottom line – how much money will I get? But there is so much more government reverse mortgage information that borrowers really need to know. For example, the amount of money a borrower can receive is based on several things: the age(s) of the borrower(s), the value of the property or the HUD lending limit for the area (whichever is less), the interest the borrower(s) pay for the loan and the costs of the loan. Borrowers often review the government reverse mortgage information papers and compare one quote to another and key in on certain elements while forgetting to look at others. For those borrowers who are only concerned with getting the absolute most money out of the transaction, in other words they have an extreme need for cash now, they may not care about all the other information pertaining to their government reverse mortgage, but for those who are also concerned about things like equity protection, it pays to know about all the elements. The margin is a particularly important piece or information on every government reverse mortgage transaction. This is a set percentage which is added to an index to determine the final interest rate that a borrower accrues interest on the loan. In other words, this will determine how much you or your heirs will owe when the loan is eventually repaid. Sometimes when borrowers compare jumbo or proprietary programs with much higher rates and margins to the HUD HECM, they may receive more money at loan funding (and sometimes the difference is not very great), but if you look at the amortization schedule, the higher interest rate erodes the equity at a much greater rate. If a borrower’s goal is to receive the absolute most amount of money possible this may not make a difference, but if the up-front cash differential between the two programs is not important, the equity retention may be worth looking at. The next piece of government reverse mortgage information that can also be beneficial to borrowers is to know what options are available. Many senior borrowers like the sound of a fixed rate mortgage, and there are fixed rate government reverse mortgages available at attractive rates. However, the information that often escapes many seniors looking at these government reverse mortgages is that they are only available if the borrower is taking a one-time distribution. In other words, the fixed rate is not available if the borrower is looking for a government reverse mortgage with the monthly payment or the line of credit option. This type of government reverse mortgage information is extremely important for seniors and their financial advisors to know. If a senior borrower is paying off an existing debt and is using the funds for that purpose or has other plans for the funds, they may not mind receiving all the funds at one time. However, need based programs such as Medicaid could be forfeited if there were funds in their account above the allowable limit. Therefore, it may not be beneficial for some seniors to access all of their government reverse mortgage funds all at once and this information is especially important to them. The last piece of government reverse mortgage information that is important but often goes unchecked is the service the company can provide from which you choose to obtain your reverse mortgage.
Is that company a member of the Better Business Bureau? This is all information some government reverse mortgage companies would rather you not ask, but it is very important. We have not only extensive experience originating government reverse mortgage loans, but have worked with government reverse mortgage services, have insured the product with the Federal Housing Administration and taught warehouse banks house to fund the loans. We bring a much more in-depth level of reverse mortgage information to the transaction so that our borrowers’ loans are originated quickly, efficiently and without unnecessary delays. Call (888) 801-2762 Ext 1 or visit Reverse Mortgage Lenders |
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