Top Reverse Mortgage Programs

One of the more popular reasons why many people recommend not getting a reverse mortgage is the higher fees. The higher fees is in the form of upfront mortgage insurance. Upfront mortgage insurance premiums are of necessary because with a Home Equity Conversion Mortgage (HECM), the FHA is responsible for paying the reverse mortgage lender for any difference between the total loan amount and the amount for which the property is sold for. The extra insurance covers the difference. As a result, the government released a new type of reverse mortgage program, called the HECM Saver.

HECM Saver

The HECM Saver loan reduces the initial mortgage insurance from 2 percent to just .01 percent, saving the homeowner quite a bit of money in fees. The HECM Saver reverse mortgage still has the ongoing FHA mortgage insurance of 1.25 percent which is also in the HECM Standard. The drawback of a HECM Saver is that the loan does not allow the homeowner to take out as much from the proeprty.

HECM Standard

The HECM Standard has an initial insurance premium of 2 percent plus the ongoing 1.25 FHA mortgage insurance. In the past, borrowers used to be able to choose between a lumpsum or monthly payments from the HECM Standard. However, the government recently voted to removed the lumpsum option.