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Upfront Reverse Mortgage Costs May Decrease Soon

Published on 09/07/2010

The Federal Housing Administration may soon decrease the upfront costs of reverse mortgages.

During a conference call with industry experts last week, FHA officials said they are finalizing a plan to offer home equity conversion mortgages (HECM) with no upfront insurance premiums attached.

"HUD is looking at options to provide a lower-priced HECM option,” said U.S. Department of Housing and Urban Development spokesman Lemar Wooley.

This new plan also would create a new lower priced home equity conversion mortgage alternative called a “saver loan.” This new loan would require an upfront mortgage insurance premium of .01 percent of the property value, and the amount that could be borrowed would be decreased by 10 percent of existing limits.

This news comes as several reverse mortgage lenders have been decreasing origination fees and closing costs. The new decreased upfront costs and saver loan alternative will give borrowers more options and make reverse mortgages easily accessible to more seniors.

If you have any questions about how these new Federal Housing Administration rules may affect your situation, our industry experts are standing by to answer your questions free of charge.

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