We are going to give you an overview of the HECM Loan Programs that are currently available in the marketplace today. These loan programs have been created using the strict guidelines and templates set forth by the Department of Housing and Urban Development (HUD). The loan programs are then federally insured through the Federal Housing Administration (FHA). In order to qualify for a HECM loan program you will need to take a Financial Assessment created by HUD and then you will meet in person or over the phone with a Government Agent to discuss how a Home Equity Conversion Mortgage works and the different options that you may have available to you.
The following loan descriptions should give you a basic overview of each of the HECM Loan Products that are currently available to you. However, we strongly advise you to give one of our licensed specialists a call at Simply Reverse if you are seriously considering doing a Reverse Mortgage so that we can go over all of the loan programs in much greater detail and make sure that we help guide your decision based on all of the knowledge and information that we provide you with. We believe that a good decision is always the product of a knowledgeable, confident, informed and comfortable borrower. A HECM Loan can change your life for the better in a matter of thirty days. These loan programs give you the power to have greater financial flexibility, control of your financial freedom, and the ability to live life to the fullest.
HECM MONTHLY ADJUSTABLE CAP 5
This HECM Program also gives you the benefits of a lifetime Cap of 5% above the original start rate in your loan as well as the opportunity to have an equity line that you can draw money from whenever you so choose provided that you have not exhausted the funds in the equity line in the past. There are two major differences between this loan program and the HECM Annual Adjustable CAP 5. The first difference is in regards to how often this loan program can adjust. This loan program can adjust monthly, however it can never go up or down by more than 2% in any one year period. The second difference revolves around your start rate. This loan’s start rate will be a little bit lower than the start rate in the HECM Annual Adjustable Cap 5 which then signifies that the lifetime Cap for this loan will also be a little bit lower than the HECM Annual Adjustable Cap 5 as well.
- Your interest rate can adjust each month.
- Your loan has a lifetime Cap of 5% above the start rate.
- Your interest rate can only go up or down a maximum of 2% in any one year period.
- You can receive an equity Line with this Loan Program.
HECM TRADITIONAL MONTHLY ADJUSTABLE CAP 10
This is the Traditional HECM Adjustable Loan Program. This loan program can adjust monthly and there is no limit on a yearly basis to how high or low your interest rate can go. This HECM loan program has a Lifetime Cap of 10% above the original start rate in your loan as well as the opportunity to have an equity line that you can draw money from whenever you so choose provided that you have not exhausted the funds in the equity line in the past. The major benefit to the HECM Traditional Monthly Adjustable Cap 10 is that the start rate for this loan program can potentially be the lowest start rate of any of the HECM Loan Programs that are being offered in the market place today.
- Your interest rate can adjust each month.
- Your loan has a lifetime Cap of 10% above the start rate.
- This Loan Program has no annual interest rate cap so the lifetime Cap of 10% would take precedence in this loan.
- You can receive an equity Line with this Loan Program.
HECM FIXED RATE FOR A LIFETIME
This HECM Loan Program allows you to obtain a fixed interest rate for the life of the loan. You will be given the option of buying the interest rate down to a lower fixed rate when you initially close your HECM Loan. Whatever rate you start with in this loan program will be fixed for the life of the loan. The one major drawback to this loan program is the fact that you cannot receive an equity line with a HECM Fixed Rate Program. You can only receive a one time lump sum when your loan funds in the HECM Fixed Rate program. This HECM Loan Program is perfect for someone who does not want a large amount of cash out at closing but would rather have the security of knowing exactly what their interest rate will be each and every month for the rest of their lives.
- Your interest rate is fixed for the life of the loan.
- You have the ability to buy down the interest rate at closing.
- You cannot receive an equity line with this loan program.
HECM HOME PURCHASE LOAN
If you are over 62 Years of Age and would like to buy a home using a HECM Loan Program you have the ability to do so. The home you buy must be your primary residence and you will need to put a much larger down payment down on the new house than you would with traditional financing. However, all of the HECM loan programs discussed above would be available to you and you would then have the option to live the rest of your life without ever having to pay another mortgage payment again. Of course, you would still have to pay your property taxes and homeowners insurance moving forward in your new home just like you would with any type of conventional financing.
- Any of the HECM Loan Programs listed above would qualify for a HECM home purchase loan.
- You will need to make a larger down payment on the new house than you would with traditional financing.
- You would then have the option of never making another mortgage payment for the rest of your life.
- It will still be mandatory that you make your property tax and homeowner’s insurance payments on your new home moving forward just like any other conventional loan program that is in the marketplace today.
Jumbo Proprietary Reverse Mortgage Options
For those homeowners who qualify for a Jumbo proprietary reverse mortgage loan, there are now fixed and Adjustable Jumbo ARM products available to them. These private reverse mortgage offerings allow borrowers to access up to $4 million of their home’s equity in tax-free cash. These loan programs have a fixed rate option, or can be used as an adjustable ARM loan program. The borrower can take a lump sum out at closing with the fixed product or with the adjustable rate ARM product the borrower has the ability to have a line of credit to draw from in the future.
Jumbo Proprietary Reverse Mortgage Benefits
- The borrower can eliminate monthly mortgage payments.
- For a property that is valued over $850,000 the borrower will be able to receive a much larger amount of cash out from their equity than in a traditional HECM Reverse Mortgage product.
- The borrower must continue to pay property taxes and homeowner’s insurance, and must keep the home in good repair, per the obligations of the loan.
- The borrower remains the owner of the home and on title.
- The amount you can borrow depends on the value of your property, your interest rate and your age.
Jumbo Proprietary Reverse Mortgage Qualifications
Borrowers must meet the following requirements.
- You must be at least 62 years old.
- You must own a high-value property and it must be your primary residence.
- The Jumbo Proprietary Reverse Mortgage loan must be able to deliver more proceeds than a traditional HECM reverse mortgage.