Find Out How To Save In Upfront Fees With A Hecm Saver!

In October of 2010, the FHA started a new program called HECM Saver Reverse Mortgage. This program is designed to provide a reverse mortgage program that would reduce upfront costs for many seniors. Outlined below are two examples of seniors who are taking advantage of the cost saving benefits of a HECM Saver.

Savings of the Saver versus the Standard Reverse Mortgage

There are two types of HECM loans, the Standard and Saver. The Standard reverse mortgage is a loan available to seniors who are at least 62 years of age and usually has higher costs than a Saver. However, the benefit to a standard is that you can access a greater percentage of equity than with a Saver. The HECM Saver has gained popularity because it has the same qualifications as a HECM standard but has a lower mortgage insurance premium. This reverse mortgage insurance premium is absolutely necessary on both products and helps ensure that a person's home is insured by the FHA. This means that the homeowners can never owe more than the home is worth.

Example: Anne lives in a $300,000 home in a mid-western suburb. The most she can borrow with a standard reverse mortgage is around 60% of her appraised value. With a HECM standard, the upfront premium is 2% of her appraised value, so $6,000 will be financed into her reverse mortgage loan for the mortgage insurance premium.

With a HECM Saver, Anne can borrow around 48% of her home's value. With a Saver the upfront premium is only .01% of her home's value so she will only have an additional $30 financed into her loan for the mortgage insurance premium. That creates a savings of $5,970!

The HECM Saver is a great option for seniors who do not need to use all the equity of their home and who wish opt for lower initial costs. It is important to weigh the options because the interest rates may vary between the programs.

How a HECM Saver Can Aid Seniors that Have a High-Value Home

Seventy-five year old Gary lives in a condo in New York City appraised at $750,000. His home exceeds the loan limit of $625,500 so his loan will be based on the maximum claim amount, not the appraised value. The most he can borrow with a standard reverse mortgage is around 66% of $625,500. His upfront reverse mortgage insurance premium will be 2% of $625,500, which is $12,510.

Now, with a HECM Saver he cannot borrow as much but he can save in upfront costs. With a Saver he can borrow just over 50% of his home's value. His upfront fee will be .01% of $625,500 which will only be $62.55. That creates a savings of $12,447.45! If a person does not need access to all of their equity, this can be a money saving option.

To see the different amounts of money that could be available with a reverse mortgage, contact a reverse mortgage specialist now!

About the Author:
With more than 10 years of experience in magazine and print, I strive to educate and inform my readers on the progressions and complexities of senior reverse mortgages in today's marketplace. To find more information, please visit http://www.seniorreversemortgage.com or call 877-267-0274!

Article Originally Published On: http://www.articlesnatch.com

Tags: HECM

, saver

, standard

, up front

, mortgage insurance

, costs

, reverse mortgage

, reverse home loan

, HUD

, FHA

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