Reverse Mortgage Information Center

The reverse mortgage world has been turned upside down again with new rules and programs. The HECM Saver Reverse Mortgage has been introduced to save homeowners money by eliminating the upfront mortgage insurance (PMI).

Over the past several months, the fees on a reverse mortgage have been steadily decreasing. So if you were shopping and unhappy with how much it was going to cost, it is time to take another look. The new program called the HECM Saver has now all but eliminated the fees. Let’s compare the fees from what they were to what they can be now.

Mortgage insurance – Mortgage insurance is mandatory on all FHA loans, and this includes reverse mortgages. The two versions of mortgage insurance are monthly and upfront. In this article we will deal with the latter. Traditionally, the upfront MI is 2% of the appraised value of the home, so if your home was worth $400,000, it would cost you $8,000. With the new program you save this fee, because it is waived.

Origination – For simplicity, we will say the maximum fee is $6,000 for origination on a reverse mortgage. It is actually calculated with a formula, but this amount applies to homes worth $400,000 or more. Since the lenders pay us to do loans on their behalf, we waive this charge and save you the money.

Service Charges – The lenders have traditionally charged a service fee for doing a reverse mortgage. This is because the lender doesn’t collect any monthly payments; it allowed them cash flow to pay for customer support and sending statements and the like. This service fee was set aside in an account, and the monthly charge was deducted from it. This service set aside was roughly $4,000 – $5,000, depending on your age. Well, many of the new reverse mortgage programs do not require any service set aside any more.

Prior to the current loan programs and changes in the industry, you may have found yourself paying upwards of $20,000 for a reverse mortgage. But now, most or all of the fees are gone or waived, so you have access to this money. I think the name HECM Saver is a good fit because it does save you quite a bit of money compared to the old program, making a reverse mortgage a very affordable loan.

See if the HECM Saver is the correct option for you. Whileyou could save money, will you get the correct benefit, or is there a better reverse mortgage loan available?