New HECM Opportunities

Issue 10.13

The very popular H.E.C.M. (Reverse Mortgage) has upcoming changes which may have opportunities hidden by all the worries of the removal of the most popular product currently available. The fixed rate H.E.C.M will no longer be available beginning April 2013.

Although the fixed rate option has been the overall favorite of seniors over the past years, there is no need to panic with the unavailability of it. In fact, just the opposite may be true. The fixed rate H.E.C.M. was restricted to one plan only. This enabled the consumer to purchase a home using a set down payment or do a refinance of an existing property and take all available equity in a lump sum. These 2 plans were the only ways it was used.

The remaining H.E.C.M. product choices have not only the maximum equity product but also include several other options as well. The following plans will be something to inquire about as each consumer may take advantage in different ways.

Purchase: based on age, purchase price and interest rate (now variable only) this allows the consumer to purchase new primary residence using a minimum down payment and make no house payments ever as long as they occupy the home.

Refinance: a consumer may use this option to take the maximum allowable equity out of primary residence and use at their discretion to enhance current cash position.

HELOC: this option allows the home owner to take out a line of credit on the equity in the home and use it only when necessary. The interest only charged to the existing balance of the loan.

Tenure: this allows available equity to be received by the consumer on a monthly basis in the form of payments. Modifications to this also allow monthly payments over a specific time period creating the possibility of higher payments.

The new look reverse mortgage will allow more versatility and creative options for the consumer. HUD continues to heavily regulate the loan for consumer protection and FHA insurance will continue to secure the loan as a safe choice for seniors.

For more details on how the new look H.E.C.M may benefit your personal scenario, contact me, Scott Gibson 435-767-1092 or 435-619-8080.

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