California Reverse Mortgage With Fewer Closing Costs
As retirees struggle to make ends meet, a California reverse mortgage has truly come in handy for many folks trying to get by on a fixed retirement income. FHA insured HECM (home equity conversion mortgage) is the loan designed for older homeowners to enable them to tap into their home equity without income qualifying or making monthly payments on the loan..
Borrowers and detractors have long held that the biggest downside to these equity loans is the high costs charged to borrowers. California reverse mortgage detractors have harped on the negative refrain that the closing costs are too high.. The closing costs easily averaged approximately 5% of the loan amount or value of the home. Roughly equivalent to the cost of selling a home in California. Valid justification can be made for the high costs of this loan, but there is no doubt they are steep. However, there is no denying that compared to a conventional ‘forward’ mortgage, the cost of a California reverse mortgage is high.
Enter, the HECM Saver. HUD rolled out a lower cost version of the popular HECM Standard, which they call the HECM Saver. The HECM Saver is now one of the FHA California reverse mortgage offerings and is also available nationwide.
This HECM loan drastically reduces the up-front FHA insurance premium cost. In fact, it brings it to 0. 01% of the appraised value of the home, or virtually zero. The HECM Standard is a full 2% of the appraised value. As you can see…a huge difference. However, the HECM Saver also reduces the amount of money a borrower is eligible to receive by roughly 15 to 20%. If tapping into the maximum amount of money is necessary to pay off an existing mortgage balance, the HECM Saver may not be an option for everyone. However, if a borrower doesn’t need the maximum loan amount, the HECM Saver could be a great choice and bring with it a huge savings in closing costs. Home equity is the key to how much money a borrower can get from this type of loan. As a result of declining home values, not everyone will be eligible for the new HECM Saver loan, because it won’t give the borrower enough money to pay off their current mortgage balance. But if you do, it is certainly worth investigating and saving some money while you’re at it.
For complete California reverse mortgage information, please visit California reverse mortgage and then request a personalized reverse mortgage quote here California reverse mortgage quote so that you can compare which HECM will give you the most money.
Posted by lufNeddayclenhz on February 13, 2011. Filed under HUD Homes.
You can follow any responses to this entry through the RSS 2.0.
You can leave a response or trackback to this entry
Recent Comments