On April 1st FHA is eliminating the popular Fixed Rate Reverse Mortgage. Only those who obtain a counseling certificate and sign an application in time to pull an FHA Case number before April 1st will have the option of obtaining this Fixed rate product.
While the HECM Line of Credit will still be available, and the Fixed Saver product (fixed rate
with much lower draw capacity, or in conventional terms, much lower loan to value requirement) the most popular Fixed product helping the consumer who has a larger mortgage the most, will disappear like the dinosaur.
The Reverse Mortgage, which has had some bad rap in the past, mostly before FHA began to insure and regulate the program, has in recent years become a serious financial planning vehicle. Many consumers over the years would pay down their home quicker than the amortization schedule called for in order to have their home free and clear at retirement, but not invest adequately in retirement accounts. The unplanned result at retirement was a nice home free and clear but not much more than social security to pay the bills. This did not, and does not turn out well, due to lack of financial planning. So, though in this case the Reverse Mortgage becomes a homeowner’s financial salvation so to speak, it has also often become the financially sound homeowner’s greatest financial planning vehicle. A homeowner age 62 or older, regardless of income or credit (to some degree) can “eliminate their mortgage payment “for life” while they are occupying their home. If there is a larger mortgage it can be paid off in many cases and the Fixed rate product is usually advisable. If there is no mortgage or a smaller one, it is generally wiser to apply for the Line of Credit to draw on monthly via auto deposit much like the monthly distribution of an IRA or 401K, but without the tax consequences. Since the program is very versatile, a consumer can draw out what they need any time they want for repairs on the home, medical care, in home care, anything virtually without qualification.
For more information or a brochure please e-mail me with Reverse in the subject line and simply ask for it, free of charge. firstname.lastname@example.org
However, if you are 62 or older or have a family member or friend who might want to consider this financial option, it is IMPERATIVE THAT YOU CALL ME ASAP, if merely to determine if the Fixed Rate Product is the correct program for you. If it is, you have only 1 or 2 days left by which you will be able to get in the system. Otherwise the still viable Line of Credit program will be the most likely choice for most.