June 22, 2009 | FHA HECM Reverse Mortgage Rate Lock Helps Seniors

 

 

 

 

 

 

 

FHA HECM Reverse Mortgage Rate Lock Helps Seniors

Why is the FHA HECM Reverse Mortgage Rate Lock Feature Important to Me?

The Reverse Mortgage rate lock dictates the amount of money you are able to obtain from the equity in your home.  Lenders can set the expected interest rate on the Federally Insured FHA HECM (Home Equity Conversion Mortgage) Reverse Mortgage (variable rate programs only) at the time of the Loan Application, or at closing, whichever brings the lower expected interest rate.  The expected interest rate is not to be confused with the loan interest rate; the expected rate is used solely to determine the loan principal limit (amount available to you).  

In the past, borrowers ran the risk of expected rates rising during that time, potentially reducing the amount of money to them. This rate lock mechanism protects you in a rising rate environment, yet lets you benefit if expected rates are lower at the time of closing. If expected rates decline between the date of application and closing, you can utilize the lower of the two expected rates and receive more money than what was originally quoted. 

What Can I do to Ensure I’m Maximizing the Full Value of My FHA HECM Reverse Mortgage?
If you’re looking into a Reverse Mortgage, you can maximize your benefits by filling out the Loan Application as soon as possible. The expected rate, which determines how much money is available to you, changes every Tuesday. Every Tuesday the amount available to you may change until you fill out the Loan Application. When you sign the Loan Application you lock in the amount of money available to you.  The example below illustrates how the rate can affect the money available to you. 

Jan                  5.75%           $49,851.36

Feb                  5.86%           $47,948.85

March            5.97%           $46,042.84

April              6.08%           $44,233.47

May                6.25%           $40,420.90

As you can see, delaying the process can reduce the amount of money available to you.  In this example, just a .50% increase in the interest rate resulted in a loss of $9,430.46! If you’re currently looking into a Reverse Mortgage I encourage you to contact an Advisor immediately to ensure you’re maximizing the full value.

Please visit us on the web @ www.stayinhome.com

Copyright © 2009 Stay In-Home – Reverse Mortgage Inc. Privacy Policy | Licensing | All rights Reserved.
Locations: 1000 124th Ave. NE, Ste. 200, Bellevue, WA 98005/4955 S. Durango Drive, Ste. 119, Las Vegas, NV 89113