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Mortgage & Financing

Reverse Mortgage in a Nutshell

  • The biggest change is the introduction of a new reverse mortgage, the Home Equity Conversion Mortgage Saver option, or HECM Saver.
  • It has a cheaper upfront mortgage insurance premium, or MIP, compared with the traditional HECM reverse mortgage, now known as the standard option.
  • Mortgage insurance protects lenders from loan losses, though borrowers pay the cost.
  • New options empower seniors to tap smaller amounts of equity in a more affordable way, according to Peter Bell, president of the National Reverse Mortgage Lenders Association. The Washington, D. C. , organization represents lenders and investors. he says.
  • The biggest change is the introduction of a new reverse mortgage, the Home Equity Conversion Mortgage Saver option, or HECM Saver.
  • It has a cheaper upfront mortgage insurance premium, or MIP, compared with the traditional HECM reverse mortgage, now known as the standard option.
  • Another change is that many lenders have reduced or eliminated their origination fees on reverse mortgages, according to Barbara Stucki, vice president of home equity initiatives at the National Council on Aging, a nonprofit service and advocacy group for older Americans, based in Washington, D. C.
  • Borrowers may be tempted by the fixed-rate option, but Susanna Montezemolo, vice president of federal affairs at the Center for Responsible Lending in Washington, D. C. , says the adjustable rate may be a smarter choice because the fixed rate requires that the borrower tap the full amount of equity upfront. she says. s still a loan against the value of a house.