WATCH THE NASCAR RACE ON SUNDAY – AND
CLICK HERE TO HELP END HUNGER IN AMERICA

Advertisement

Contests and
Sweeps

Southfork Ranch Travel Adventure Sweepstakes!

Enter now for a chance to win a Texas-sized prize pack. Do

aarp
Bookstore

Visit the Money Section

Enjoy titles on retirement, Social Security, and becoming debt-free. Do

Money & work
webinars

Learn From the Experts

Sign up now for an upcoming webinar or find materials from a past session. 

Jobs You Might Like

Money
PROGRAMS

Money Matters Tip Sheets

Download and print out these PDFs to help with your financial matters.

Free Lunch Seminar Monitor Program

Attend investment seminars and tell us what you find.

AARP Foundation Tax-Aide

You can get free, face-to-face tax assistance nationwide.

most popular
articles

Viewed

Recommended

Commented

A Reverse Mortgage for Less

The FHA's new HECM Saver program charges lower upfront fees.

  • Text
  • Print
  • Comments
  • Recommend

Does a HECM Saver make sense?

If you've made the decision to take out a reverse mortgage and can meet your needs with the lower amount offered under the HECM Saver, then go for it. The new HECM Saver is always less expensive than the new HECM Standard. But if you need to borrow the maximum available to you, then you'll now pay considerably more for the new HECM Standard than you would have for the old HECM Standard.

The HECM Saver also makes sense when you want to take out only a small loan, say to redo your kitchen, or you don’t plan to stay in your home for very long. The upfront insurance premium is substantially less than what’s charged for a HECM Standard — 0.01 percent  versus 2 percent , you’ll recall — and the ongoing premiums (at 1.25 percent) will only accrue for a relatively short time.

"If someone only needs to borrow a small amount and knows they will be moving in a couple of years, the HECM Saver may make sense," Redfoot says. "The HECM Saver is less expensive if you take small loans for short periods."

And if your house is worth a lot, then you stand to benefit even more upfront from the HECM Saver. Let’s say your home is valued at $550,000. Eliminating the 2 percent upfront insurance premium will save you nearly $11,000.

Reverse mortgage basics

Ultimately with a reverse mortgage, the amount you get is based on your age, current interest rates and the appraisal of your home. The older you are, in general, the more you receive. To qualify for a reverse mortgage, you have to be at least 62 years old, and any outstanding mortgage balance must be less than the loan amount that can be received by a HECM, since other liens must be retired as a condition of the loan.

With a reverse mortgage, you won’t undergo a credit check or have to have a specific amount of income to qualify. You’ll need to go through a HUD counseling session, which provides helpful information about reverse mortgages and alternatives you should consider before taking out a loan. While you don't have to worry about making monthly mortgage payments, you're still be responsible for keeping current on real estate taxes and homeowners insurance premiums.

  • Print
  • Bookmark

Tell Us WhatYou Think

Please leave your comment below.

You must be signed in to comment.

Sign In | Register

More comments »

Complete the Medicare and Social Security questionnaire now

Discounts & Benefits

Geek Squad Computing

Members save on Geek Squad services with Geek Squad® Tech Support & Guidance for AARP® Members.

UPS

Members get 15% off eligible products/services. 5% off UPS shipping at The UPS Store.

AARP Credit card from Chase

Members earn 3% cash back on eligible travel purchases with AARP® Visa® Card from Chase.

Member Benefits

Members receive exclusive member benefits & affect social change. Join Today

Being Social

featured
groups

Hand holding credit cards

Pay Down Your Debt Challenge

Start your debt-free journey. Discuss

savingchalleng

Savings Challenge

Have the gift of thrift? Share your tips. Discuss

Jobs You Might Like