Products

Products

Home Equity Conversion Mortgage Products

For Refinance and Purchase.

 

What to watch out for in 2015…
  • Financial Assessment Review for all borrowers begins April 27th, 2015!
  • LESA or “Life Expectancy Set Asides” begin April 27th, 2015!
  • Look for updates in the FAQ sections!

 

The HECM 60…what does the “60” mean?

 

The Federal Housing Administration’s Home Equity Conversion Mortgage (HECM)’s  Up Front Mortgage Insurance Premium is calculated based on the initial amount of the loan proceeds the borrower receives within the first twelve months of the loan closing.

This includes all mandatory obligations (existing mortgages, if any, Federal Debt that is in default, closing costs and other monies based on underwriting guidelines).

  • If the first 12 month total proceeds are <60% of your maximum loan amount, the  Up Front Mortgage Insurance Premium is calculated at .5% of your principal limit
  • If the first 12 month total proceeds are >60%, your up front mortgage insurance premium is calculated at 2.5% of the principal limit

If your mandatory obligations exceed 60% at closing, borrowers may access an additional 10% of the Principal Limit such that the total principal limit is not exceeded.

 

Three HECM 60 loan types are available:

HECM 60 Fixed

An interest rate that is Fixed for as long as the loan is in place. The borrowers have the option of taking a full draw at closing or a lesser amount as needed. Any funds NOT USED at closing, will no longer be accessible.

HECM 60 Adjustable

Provides flexibility because it offers several ways you can receive your money: line of credit, monthly payments, lump sum, or a combination of all three. If you chose the line of credit, you withdraw your loan funds when you need them and the amount of funds remaining available to you in that account grows larger each month (see Line of Credit Growth Factor). Adjustable reverse mortgage loans have interest rates that increase or decrease as market conditions change. The index currently used is the LIBOR. LIBOR stands for “London Inter-Bank Offered Rate.” An adjustable rate will accrue interest at a lower rate at today’s rates, but has the potential to move higher. The Life Cap is 10% above the initial interest rate on all variable products.

HECM 60 Hybrid

The Adjustable Hybrid Loan provides similar flexibility as the Adjustable Rate with two primary and important differences. 1) The Hybrid uses the “One Year Libor Index” vs. the “One Month Libor Index.” This means your interest rate only adjusts (up or down) once a year instead of every month; 2) The Adjustable Hybrid has a “Life Cap” of 5% over the initial interest rate vs. a 10% “Life Cap” with the Adjustable Rate. A lower “interest rate cap” is beneficial because it lowers the projected amount of interest the loan can accrue.