A reverse mortgage is a program that is designed specifically for senior citizens (62 years and older). Unlike a traditional mortgage where monthly mortgage payments are required, reverse mortgages do not require a monthly mortgage payment (property taxes and home owners insurance is still due).
Reverse mortgages are a great option for seniors to consider if they want to reduce their monthly cash flow or require a sum of cash.
Recently HUD has announced they are changing some of their reverse mortgage (home equity conversion mortgage aka “HECM”) program guidelines which will go into effect with case numbers issued April 1, 2013 and after.
From HUD’s Press Release:
As discussed in its Annual Report to Congress, FHA will consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. This change will be effective for FHA case numbers assigned on or after April 1, 2013. The Fixed Rate Standard HECM pricing option currently represents a large majority of the loans insured through FHA’s HECM program and is responsible for placing significant stress on the MMI Fund. To help sustain the program as a viable financial resource for aging homeowners, the HECM Fixed Rate Saver will be the only pricing option available to borrowers who seek a fixed interest rate mortgage. Using the HECM Fixed Rate Saver for fixed rate mortgages will significantly lower the borrower’s upfront closing costs while permitting a smaller pay out than the HECM Fixed Rate Standard product, thereby reducing risks to the Mutual Mortgage Insurance Fund. Read FHA’s new HECM Mortgagee Letter.
If you would like more information about a reverse mortgage for you or your parents on a home located anywhere in Washington state, please contact me.