HappySeniorHomeOwners Blog

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For days now the Reverse Mortgage Industry has been saying that HUD would be reducing the proceeds (Principal Limit) you could receive from a HECM Reverse Mortgage.

Well, effective October 4, 2010, that amount WILL be reduced by a still undetermined percentage. 

That should NOT affect applicants who applied and a FHA case number was assigned as of October 3rd., and who could close within a specific time period to be advised.

However, if the applicant chooses, the previous plan can be converted to "HECM Saver"

THE GOOD!!!

However, not every thing is Bad News. HUD would also lower the Interest rate. Since the lower rate increases  the proceeds (Principal Limit) you could receive could be higher.

We still have to run the estimate with the new numbers to determine, on a case by case basis, if the proceeds will be lower, higher or about the same.

Also, the "HECM Saver" will have lower Up-Front costs. This would also make more proceeds available to the Borrower.

You would have a bigger choice of Plans to fit your needs. That is Great News!

October 4 is around the corner. In a few days we will have better answers to all our questions.

Also, many folks are not aware that there is only ONE (1) formula provided by HUD to every  Lender in the USA. This formula determines the Proceeds ("Principal Limit") that you could receive. Not two, ONE.

The "Principal Limit" will be exactly the same based on your: Age, exact same Home Value and Interest Rate.

There are various Fixed or Variable Rate Plans, some have lower closing costs, some use the LIBOR, but the Base Amount, the Principal Limit, is the same no matter how many Lenders you ask.

Obtaining a Reverse Mortgage is a serious endeavor. Choose a Lender and Loan Originator that you can trust and has the experience to advise you correctly.

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