FHA Home Equity Conversion Mortgage (HECM)

The Home Equity Conversion Mortgage (HECM) is the oldest and most popular reverse mortgage program, accounting for over 90 percent of the total market. Available since 1989 to homeowners 62 or older, HECMs are insured by the federal government through the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development.

There are two HECM programs available - the HECM 1.0 and the HECM Fixed

• HECM 1.0
  This program has the lowest rate on the market and provides the most money and payment options for people with moderate home values or close to the FHA maximum claim amount for their area.
  
  
• HECM Fixed
  The Government back fixed rate mortgage. This new option is a welcome program for many older homeowners who do not like the uncertainity of a variable rate. There is a one payment option that draws upon all of the available funds at closing. The interest rate will not change over the life of the loan.
  

The amount of money you get from a HECM depends on several factors, including: your age, appraised home value, and current interest rates. In general, the older you are and the more valuable your home (and the less you owe on your home), the more money you get.
The location of your home also affects the loan size. The size of a HECM depends on the maximum loan limit, which varies by county and is adjusted annually. Currently, the FHA loan limit varies from a low of $172,632  to a high of $362,790. Call us for the loan limit in your area.

HECM borrowers must pay a mortgage insurance premium (MIP), equal to 2 percent of the maximum loan limit, plus an annual premium thereafter equal to 0.5 percent of the loan amount. The insurance premium guarantees that  you have continued access to your loan funds. Also, the MIP guarantees that you will never owe more than the value of your home when the HECM must be repaid.

Proprietary "Jumbo" Reverse Mortgages

This includes programs known as 'Jumbo reverse mortgages', suited for higher home values, no maximum claim amount limitation, some programs are suited for home purchase and second homes.

• The Independence Plan This Jumbo program has the lowest interest rate on the market. The margin is 2.1% above the 6 month LIBOR index. Funds may be received through cash, line of credit or monthly draws from the line of credit. The origination fee is capped at $4,000. If the initial draw is $200,000 or higher, the origination fee is waived. If the initial draw is $275,000 or higher a credit toward outside closing costs is applied.
  
  
• Prime Advantage Fixed This is a new jumbo program allows the borrower a fixed rate for the life of the loan. All available funds must be drawn at closing. There are no closing costs for this program.
  
  
• Generation Plus This program is popular for the high growth in available line of credit.The growth is tied to the starting rate and fixed for the duration of the mortgage. The variable rate is tied to the 1 month LIBOR index with a margin of 4.5%. The borrower is responsibile for the origination fee and outside closing costs that may be added to the loan balance.
  
  
• Cash Account This is the original variable rate jumbo reverse mortgage. The rate is tied to the 6 month LIBOR index with a margin of 3.5%. Borrowers may select a lump sum, credit line or automatic monthly draws from the credit line. Zero origination fee and zero cost options are offered based on cash draws at closing.
  
  
• Simple Equity This variable rate reverse jumbo mortgage is tied to the 6 month LIBOR index plus a maring of 3.5%. Borrowers may select a lump sum, credit line or automatic monthly draws from the credit line. Zero origination fee and zero cost options are offered based on cash draws at closing.