The Experts
Excelling in Service
Excelling in Service
651-762-9648
1-877-590-9648
A Division of Greenleaf Financial, LLC MO 173899
Minnesota Reverse Mortgage Products
- FHA/HUD insured Home Equity Conversion Mortgage (HECM)
- HECM Saver
- HECM Home Purchase Program
- Proprietary (Private) Jumbo Reverse Mortgages
- Features of all Reverse Mortgage Programs
All Products listed are offered by Reverse Mortgages SIDAC.
The Home Equity Conversion Mortgage (HECM), currently the most common reverse mortgage, is federally insured and regulated. Lending limits are set by the Federal Housing Administration (FHA) based on the county in which one lives.
Offering the most choices on how the funds are received makes the HECM the most versatile reverse mortgage program. The interest rate is based on the LIBOR (London Inter-Bank Offertory Rate) plus a margin.
There is a servicing fee with all the HECM products, currently $30 a month with Reverse Mortgages SIDAC. A service set-aside is implemented to cover the monthly servicing fee. Click here to learn about the servicing fee.The Principal Limit Protection features, implemented in 2006, is offered on the Monthly Adjustable and can lock the index of the loan - however it does not lock the margin. Click here to learn about the Principal Limit Protection feature.
Visit "Frequently Asked Question" for more details.
The HECM Annual Rate program has the same features as the Monthly Adjustable Rate although the rate adjusts annually. With a higher margin the interest rate is higher and less funds are available to borrowers, making this HECM program seldom chosen.
With some of the same features as the HECM Monthly Adjustable Rate program, the HECM Fixed offers a fixed rate option. There is one rate for borrowers drawing 100% of their available funds upfront. With this option funds are not available in a line of credit or for monthly payments.
A higher fixed interest rate applies to those choosing to receive their funds as tenure, term, line of credit or a combination of these.
The rate is based on the U.S. Treasury Index plus a margin with a rate lock available.
While a fixed rate reverse mortgage sounds enticing, once it is understood, it is seldom the best choice for a reverse mortgage. This is because the interest rate is higher initially and less funds are available than with the more common monthly adjustable rate. The lowest fixed rate is available when all the funds are drawn up front. The rate is much higher for the monthly payment or line of credit fixed rate options.
Another disadvantage with the Fixed Rate is interest is being accrued on all funds drawn up front when it may not be necessary to take all the funds initially. Additionally, the growth rate is not available on the funds in the line of credit on the Fixed Rate program.
The Monthly Adjustable Rate using the CMT has averaged 6.19% over the last 15 years. This means in the big picture, the Monthly Adjustable program costs less. Click here for this week's interest rates.
The HECM Saver has all the same features of the original HECM (called the HECM Standard) including Fixed and Adjustable Rates. However the upfront FHA Mortgage Insurance Premium is 0.01% compared to 2.00% which helps reduce the upfront closing costs. But it also reduces the Principal Limit or maximum loan amount available to borrowers.
The HECM Saver could be beneficial to those who don’t want to pay as much in the upfront closing costs but also don’t want to use as much equity from their home. It can be ideal if one plans on moving in a shorter period of time or has a higher home value and wants to preserve more of the equity.
One must always look at their situation to determine which program will work best for their circumstances. A consideration while reviewing the options between a HECM Saver and the HECM Standard (the original program), is whether in a few years one will have used all the proceeds from the HECM Saver and will need more funds. While one can refinance a reverse mortgage, when refinancing a mortgage one pays the closing costs again (just as is done with a conventional mortgage) and the first mortgage must be paid off.
Consequently while saving on the upfront MIP with the HECM Saver, if more funds are needed at a future date, it could be more costly when refinancing by paying the closing costs a second time.
The HECM Home Purchase Program provides financing to those who desire to downsize, move closer to children or purchase a new home without have mortgage payments.
If you are over 62 and purchasing a new home, call us to learn how a reverse mortgage can provide financing and eliminate your mortgage payments.©2006-2011 Reverse Mortgages SIDAC 651-762-9648
Proprietary (Private) Jumbo
Reverse Mortgage Loan Programs
(Proprietary Reverse Mortgage Programs are
not available in Minnesota at this time.
If you currently have one of these products,
they do continue to be supported.)
Reverse Mortgage Loan Programs
(Proprietary Reverse Mortgage Programs are
not available in Minnesota at this time.
If you currently have one of these products,
they do continue to be supported.)
Proprietary Jumbo Reverse Mortgages are generally for seniors with higher home values (usually $400,000 and above).
With much higher or unlimited lending limits, the amount of funds available to a borrower may be much greater than other reverse mortgage programs especially for homes over $400,000 in rural areas.
Jumbo loans may offer more options benefiting the borrower(s) and their particular situation. Jumbo reverse mortgages have Home Purchase Products available.(If you are over 62 and purchasing a new home, call us to learn how a reverse mortgage can provide financing and eliminate your mortgage payments.)
Additionally, jumbo reverse mortgages can be done on a secondary home.The proprietary jumbo reverse mortgage programs are not currently available.
Contact Reverse Mortgages SIDAC for a review of all the options of reverse mortgages in Minnesota to see which option will be the best for your situation.
Features on all reverse mortgage programs include:
- No monthly payments
- No income or credit qualifications
- No personal liability, they are all non-recourse
- No equity sharing or appreciation sharing
- Loan is due and payable when the home is no longer the primary residence of the borrower(s)
- Independent Counseling is required.
How the funds will be received and utilized will be the factors used to determine which product is right for your situation.
Reverse Mortgages SIDAC, The Experts Excelling in Service, will work with you, providing calculations and amortization schedules, and comparisons, to review and determine which product is best for your situation. Give us a call for more information or clarification on the reverse mortgage products.
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Reverse Mortgages SIDAC The Experts Excelling In Service providing Security, Independence, Dignity, and Control by helping senior homeowners over 62 convert the equity of their home into cash, faster and easier, with reverse mortgages.©
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©2005-2011 Beth Paterson | Reverse Mortgages SIDAC. All Rights Reserved.
