The FHA HECM Saver Program
December 6, 2010
FHA borrowers interested in FHA guaranteed home equity conversion loans, (also called FHA HECM loans for short) should know about a new FHA program called HECM Saver.
The FHA's HECM Saver program is designed as what the FHA describes "as a second reverse mortgage option for the purpose of lowering upfront loan closing costs for homeowners who want to borrow a smaller amount than what would be available with a HECM Standard loan. "
That option is now available for HECM loans with case numbers given on or after October 4, 2010. Like other FHA-insured home equity mortgages, HECM Saver allows qualified borrowers to take out a second mortgage based on the equity built up in the home. The second mortgage does not require a monthly payment.
Interest on the loan accrues once the loan is issued, but payments don't become due until the owner sells the home, stops using it as their primary residence or passes away. At the time the loan becomes due, the FHA guarantee is used to pay any outstanding difference between the value of the home and the amount of the loan.
What makes the HECM Saver different than standard HECM loans? One of the most important features is the reduced amount of up-front closing costs. FHA officials not that in some cases, traditional HECM loan closing costs are too high for those who qualify. HECM Saver has a much lower up front Mortgage Insurance premium, which is only 01. % of the loan amount. Compare that amount to the standard HECM up front mortgage insurance premium, which is two percent of the total loan amount.
Under HECM Saver, qualified borrowers can get a lump sum, a line of credit, or choose to receive fixed monthly payments, the same as with the standard HECM loan program.
The FHA's HECM Saver program is designed as what the FHA describes "as a second reverse mortgage option for the purpose of lowering upfront loan closing costs for homeowners who want to borrow a smaller amount than what would be available with a HECM Standard loan. "
That option is now available for HECM loans with case numbers given on or after October 4, 2010. Like other FHA-insured home equity mortgages, HECM Saver allows qualified borrowers to take out a second mortgage based on the equity built up in the home. The second mortgage does not require a monthly payment.
Interest on the loan accrues once the loan is issued, but payments don't become due until the owner sells the home, stops using it as their primary residence or passes away. At the time the loan becomes due, the FHA guarantee is used to pay any outstanding difference between the value of the home and the amount of the loan.
What makes the HECM Saver different than standard HECM loans? One of the most important features is the reduced amount of up-front closing costs. FHA officials not that in some cases, traditional HECM loan closing costs are too high for those who qualify. HECM Saver has a much lower up front Mortgage Insurance premium, which is only 01. % of the loan amount. Compare that amount to the standard HECM up front mortgage insurance premium, which is two percent of the total loan amount.
Under HECM Saver, qualified borrowers can get a lump sum, a line of credit, or choose to receive fixed monthly payments, the same as with the standard HECM loan program.
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