Recent changes have been made to the FHA-insured* reverse mortgage or Home Equity Conversion Mortgage (HECM) by HUD, which may impact impending client proposals.
It is important to note that the changes made to the HECM program, specifically an increase to the mortgage premiums, will enhance the financial strength of the insurance fund. The increase in insurance premiums will add to the reserves that “insure” a client’s ability to access HECM payments for decades to come.
However, the changes also include a reduction to the amount made available to clients. Both changes will take effect on October 2, 2017.
So, what does this mean for your eligible clients age 62+? Quite simply, it means that the current low-cost† HECM line of credit option with an available line that will grow‡ may not be available after October 2nd.
†With this pricing option, borrower receives a lender credit covering nearly all closing costs. Up-front cost shown is for a non-refundable independent counseling fee of approximately $125 on average, which the borrower pays directly to the counseling agency. Terms and conditions apply. Not available in all states.
‡If part of the borrower’s loan is held in a line of credit upon which they may draw, then the unused portion of the line of credit will grow in size each month. The growth rate is equal to the sum of the interest rate plus the annual mortgage insurance premium rate being charged on the borrower's loan.
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*With this pricing option, borrower receives a lender credit covering nearly all closing costs. Up-front cost shown is for a non-refundable independent counseling fee of approximately $125 on average, which the borrower pays directly to the counseling agency. Not available in all states. Certain conditions and fees apply.
It's no secret that more and more advisors are starting to leverage technology to make their practices more efficient. In this webinar, Dan Egan and Elisa Garcia of Betterment will examine trends in the robo space and changing consumer habits that are paving the way for this rise in investment management technology. We'll also hear from two advisors utilizing the Betterment for Advisors tool to help streamline their businesses and better manage clients’ assets.
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Many retirees will choose to move from the large home in which they raised their family into something smaller and more manageable to maintain. These retirees will be faced with the financial decision of how to best finance their new home. Traditional financing options exist which include paying cash for the home, or using a traditional mortgage. One newer, and lesser known option, is the Home Equity Conversion Mortgage (HECM) for Purchase, where the HECM reverse mortgage can be used directly for the purchase of a new home.
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