Saturday, January 1, 2011
Tuesday, November 2, 2010
New HECM Saver Option
The purpose of the new HECM Saver program is to lower upfront closing costs for senior borrowers who wish to borrow smaller amounts than the maximum loan amount that would otherwise be available to the borrower under the traditional HECM product. ML 10-34 thus coined new product names for the two HECM programs that are available to senior borrowers: HECM Standard and HECM Saver. According to ML 10-34, the two programs must be identified as separate and distinct initial mortgage insurance premium (MIP) options.
In a nutshell, the HECM Saver is a second FHA-insured HECM option that essentially carries no initial MIP. Effective for all HECM case numbers assigned on or after October 4, 2010, senior borrowers may select either a HECM Saver or a HECM Standard option. In addition, ML 10-34 implemented changes in the following areas related to HECM lending: determining initial and monthly MIP; calculating the initial MIP in HECM refinance transactions; setting new reduced HECM principal limit factors and a reduced effective interest rate floor; providing guidance for managing the existing pipeline of HECM loans; and utilizing correct and updated HECM loan documents and disclosures.
All existing program features associated with the HECM Standard are also available under the HECM Saver. This includes all HECM transaction types (traditional, purchase money and refinance); all five payment plans (tenure, term, line of credit, modified tenure and modified term),; adjustable and fixed interest rate features: and all interest rate indices (CMT and LIBOR).
Initial and Monthly Mortgage Insurance Premiums
By statute, all FHA-insured loan programs must provide for an initial MIP.2 As a result, for the HECM Saver, HUD announced that the initial MIP will be 0.01% of the maximum claim amount (or “MCA”), which is collected at the time of loan closing. For an average MCA of $250,000, under the HECM Saver the initial MIP will be $25. For HECM Standard, the initial MIP will continue to be 2% of the MCA, which is also collected at the time of loan closing. Thus, under the HECM Standard, an average MCA of $250,000 will require an initial MIP in the amount of $5,000. The term “maximum claim amount” is defined as the lower of the appraised value, the national mortgage limit, or the sales price for the home (for HECM for purchase loans).
Monthly MIP (the mortgage insurance premium that accrues to the loan and paid monthly to HUD) for both HECM Saver and HECM Standard will be charged at an annual rate of 1.25% of the outstanding loan balance. As a reminder, HUD previously increased the monthly MIP for “traditional” HECM loans (i.e., HECM Standard) from .50% to 1.25 % pursuant pursuant to Mortgagee Letter 2010-28, effective for all case numbers assigned on or after October 4, 2010.
This may be a good option for seniors who are looking for a shorter term loan or preserving equity in their property.
In a nutshell, the HECM Saver is a second FHA-insured HECM option that essentially carries no initial MIP. Effective for all HECM case numbers assigned on or after October 4, 2010, senior borrowers may select either a HECM Saver or a HECM Standard option. In addition, ML 10-34 implemented changes in the following areas related to HECM lending: determining initial and monthly MIP; calculating the initial MIP in HECM refinance transactions; setting new reduced HECM principal limit factors and a reduced effective interest rate floor; providing guidance for managing the existing pipeline of HECM loans; and utilizing correct and updated HECM loan documents and disclosures.
All existing program features associated with the HECM Standard are also available under the HECM Saver. This includes all HECM transaction types (traditional, purchase money and refinance); all five payment plans (tenure, term, line of credit, modified tenure and modified term),; adjustable and fixed interest rate features: and all interest rate indices (CMT and LIBOR).
Initial and Monthly Mortgage Insurance Premiums
By statute, all FHA-insured loan programs must provide for an initial MIP.2 As a result, for the HECM Saver, HUD announced that the initial MIP will be 0.01% of the maximum claim amount (or “MCA”), which is collected at the time of loan closing. For an average MCA of $250,000, under the HECM Saver the initial MIP will be $25. For HECM Standard, the initial MIP will continue to be 2% of the MCA, which is also collected at the time of loan closing. Thus, under the HECM Standard, an average MCA of $250,000 will require an initial MIP in the amount of $5,000. The term “maximum claim amount” is defined as the lower of the appraised value, the national mortgage limit, or the sales price for the home (for HECM for purchase loans).
Monthly MIP (the mortgage insurance premium that accrues to the loan and paid monthly to HUD) for both HECM Saver and HECM Standard will be charged at an annual rate of 1.25% of the outstanding loan balance. As a reminder, HUD previously increased the monthly MIP for “traditional” HECM loans (i.e., HECM Standard) from .50% to 1.25 % pursuant pursuant to Mortgagee Letter 2010-28, effective for all case numbers assigned on or after October 4, 2010.
This may be a good option for seniors who are looking for a shorter term loan or preserving equity in their property.
Wednesday, May 26, 2010
New Options for Reverse Mortgage Borrowers...get more save more
Thousands of dollars are now available at a lower cost for reverse mortgage borrowers. This new pricing option will allow seniors to get more money—it will remove the servicing and origination fee, making the new amount of money available between $3,500-$10,000.
With this option, the homeowners 62 or older can unlock even more of their equity and draw the proceeds of the loan in an up-front lump sum. This can be beneficial when it comes to paying off a mortgage, supplement retirements and medical bills.
Individual cases will, of course, differ, but most senior borrowers will receive more money with the new rule. There will be other costs involved, which can include the FHA mortgage insurance premium, mortgage taxes, recording fee, appraisals, etc
www.pwneufeld.com
With this option, the homeowners 62 or older can unlock even more of their equity and draw the proceeds of the loan in an up-front lump sum. This can be beneficial when it comes to paying off a mortgage, supplement retirements and medical bills.
Individual cases will, of course, differ, but most senior borrowers will receive more money with the new rule. There will be other costs involved, which can include the FHA mortgage insurance premium, mortgage taxes, recording fee, appraisals, etc
www.pwneufeld.com
Friday, April 9, 2010
New HECM Pricing + Lower Fees
Effective 4/7/10 new fixed-rate of 5.49% or LIBOR variable rate 2.25% with zero origination fees. Great opportunity for seniors to save over $2500 in fees and get more and save more.
Tuesday, January 5, 2010
Piggy Bank your House-
I want to share with you a story that was one of the highlights what this business is all about. It demonstrates how we as reverse mortgage professionals can make a difference in a family’s life.
I was contracted by a lender working with a realtor looking for property for a retired couple moving from southeast Missouri to the Kansas City area. They had sold their home and planned to relocate closer to family members. Plans were to use cash equity proceeds from the sale for a conventional mortgage purchase.
Several discussions were held and a meeting to discuss financing arrangements including a traditional mortgage or the HECM FHA purchase program. They were wary about the reverse mortgage program as they hadn’t heard about the program for seniors age 62 and over. After a detailed program explanation, they decided to apply for a HECM purchase.
They had determined their price range and based on the reverse mortgage estimate, they could put cash equity from their sale plus cash proceeds from the reverse mortgage purchase their new home and have no future payments for as long as they live in their home.
Application documents were submitted and we closed their loan about five weeks later, I will never forget that day. When we were done signing the closing documents, the wife looked at me with a twinkle in her eyes and said, “Well, when we started this process I thought this sounded to good to be true, but it's true!” They were so happy that they didn’t have to make monthly mortgage payment as cash from reverse mortgage helped them fund their home and give them peace of mind.
www.pwneufeld.com
I was contracted by a lender working with a realtor looking for property for a retired couple moving from southeast Missouri to the Kansas City area. They had sold their home and planned to relocate closer to family members. Plans were to use cash equity proceeds from the sale for a conventional mortgage purchase.
Several discussions were held and a meeting to discuss financing arrangements including a traditional mortgage or the HECM FHA purchase program. They were wary about the reverse mortgage program as they hadn’t heard about the program for seniors age 62 and over. After a detailed program explanation, they decided to apply for a HECM purchase.
They had determined their price range and based on the reverse mortgage estimate, they could put cash equity from their sale plus cash proceeds from the reverse mortgage purchase their new home and have no future payments for as long as they live in their home.
Application documents were submitted and we closed their loan about five weeks later, I will never forget that day. When we were done signing the closing documents, the wife looked at me with a twinkle in her eyes and said, “Well, when we started this process I thought this sounded to good to be true, but it's true!” They were so happy that they didn’t have to make monthly mortgage payment as cash from reverse mortgage helped them fund their home and give them peace of mind.
www.pwneufeld.com
Tuesday, December 1, 2009
HECM Loan Limit Remains at $625,500
Mortgagee Letter 2009-50 was published today by the Federal Housing Administration (FHA) that will extend the resolution recently passed by Congress to keep loan limits for Home Equity Conversion Mortgages (HECM’s) at $625,500 through December 31, 2010.
The letter confirms that Alaska, Hawaii, Guam and the U.S. Virgin Islands will operate under the same $625,500 limit as.
Click Here
The letter confirms that Alaska, Hawaii, Guam and the U.S. Virgin Islands will operate under the same $625,500 limit as.
Click Here
Wednesday, November 25, 2009
Why Reverse Mortgages Need Mortgage Insurance
Reverse mortgages have proven to be a great help to many seniors in recent years and it looks like they will continue to help many more in the future. Among other great features that they have, a reverse mortgage enables seniors to have a cash flow even when everything else is experiencing difficulties due to economic stress.
Reverse Mortgage Money Is Guaranteed to Be Available
The HUD reverse mortgage program, called Home Equity Conversion Mortgages (HECM’s), offers a guarantee on these loans that most other companies do not offer. Recent days have seen many people with HELOCS find out that no more money is available to them. Their money has been frozen, even though it was supposed to be available when they wanted to withdraw it.
HUD’s program, which is made available as an FHA reverse mortgage, has a guarantee on it to ensure that seniors who have a reverse mortgage through them will be able to get their money when they want it. This means that your money is secure even if the company that actually gave you the loan goes out of business.
Mortgage Insurance Fees Are Charged
The money needed to cover this expense is taken out in a upfront 2% charge – the mortgage insurance premium (MIP). It is a reverse mortgage rate that is set by the government and is 2% of the total value of your home. In addition, there will be a monthly charge of 0.5% in order to maintain the cost of your mortgage insurance.
The main reason for these charges is because the government does not subsidize the HECM program. It is the money that comes from each reverse mortage owner that covers the costs. If your home should decrease in value, or if you live longer than expected, it will be money from these charges that will make up the difference.
Mortgage Insurance Prevents You from Paying More than the Home’s Value
Besides insuring that your money will be there, it is this money that will also make sure that the amount owed when it is due is not going to cost you more than the value of your home. This protects you and your relatives – no matter what happens to the value of your home. Be aware, however, that this guarantee is only for government HECM’s.
The mortgage insurance premium provides you with the assurance that your money will be there. You never need to be concerned about making a payment on it, either, because the 2% is taken out when you get the reverse mortgage, and the rest is subtracted from the total amount available. This means you never have to make a payment while you are living in your home.
Reverse Mortgage Money Is Guaranteed to Be Available
The HUD reverse mortgage program, called Home Equity Conversion Mortgages (HECM’s), offers a guarantee on these loans that most other companies do not offer. Recent days have seen many people with HELOCS find out that no more money is available to them. Their money has been frozen, even though it was supposed to be available when they wanted to withdraw it.
HUD’s program, which is made available as an FHA reverse mortgage, has a guarantee on it to ensure that seniors who have a reverse mortgage through them will be able to get their money when they want it. This means that your money is secure even if the company that actually gave you the loan goes out of business.
Mortgage Insurance Fees Are Charged
The money needed to cover this expense is taken out in a upfront 2% charge – the mortgage insurance premium (MIP). It is a reverse mortgage rate that is set by the government and is 2% of the total value of your home. In addition, there will be a monthly charge of 0.5% in order to maintain the cost of your mortgage insurance.
The main reason for these charges is because the government does not subsidize the HECM program. It is the money that comes from each reverse mortage owner that covers the costs. If your home should decrease in value, or if you live longer than expected, it will be money from these charges that will make up the difference.
Mortgage Insurance Prevents You from Paying More than the Home’s Value
Besides insuring that your money will be there, it is this money that will also make sure that the amount owed when it is due is not going to cost you more than the value of your home. This protects you and your relatives – no matter what happens to the value of your home. Be aware, however, that this guarantee is only for government HECM’s.
The mortgage insurance premium provides you with the assurance that your money will be there. You never need to be concerned about making a payment on it, either, because the 2% is taken out when you get the reverse mortgage, and the rest is subtracted from the total amount available. This means you never have to make a payment while you are living in your home.
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