Reverse Mortgage Providers

Reverse mortgage loans and regulations have underwent a serious of debates and changes this past 12 months. A little under 10% of borrowers have had their homes foreclosed upon because of not realizing that they are still responisble for property taxes. In some cases, the borrowers selected the lump sum reverse mortgage did not plan properly to pay for the property taxes and home insurance. As a result, lump sum reverse mortgage options will soon be no longer available. There will be a limit of up to 60% of the principal limit that can be taken out at closing or in the first year of the reverse mortgage in most cases.

Reverse Mortgage Requirements

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Upcoming Reverse Mortgage Changes

Any reverse mortgage applications after September 30, 2013 will have to due with changes in reverse mortgage regulations. Financial assessment tests will be conducted to determine if a borrower has the ability to pay property taxes and homeowners insurance. Current assets, credit report, income will all be considered in these tests. If the borrower is not deemed capable of paying property taxes and insurance, an escrow account will be established with the funds coming from the reverse mortgage itself.

Other changes include the consolidation of HECM Saver and HECM Standard into one loan. The HECM Saver previously had a 0.01% upfront mortgage insurance premium (MIP) while the HECM Standard's MIP was 2.0%. The new consolidated loan will be adjusted to 0.5%. Additionally, if more than 60% of the principal limit is taken out at closing or within the first 12 months, an additional 2% will be added to the MIP, bringing the total to 2.5%.

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