We got word from some of our loan counselor connections about a new low cost reverse mortgage product from our good friends at HUD. HUD announced that they would release the new product on October 4, 2010. So what is this new product?
Branded as the “HECM Saver”, this low cost reverse mortgage product will be insured by the Federal Housing Administration. Unlike the standard HECM, which sticks borrowers with a 2% upfront Mortgage Insurance Premium (MIP), the HECM Saver lowers the cost for borrowers by charging only 0.01% upfront MIP. The product will also have an annual MIP of 1.25%.
This new and improved mortgage will be offered as a fixed and adjustable rate, and this Super Saver will have principal limit factors around 11-23% lower than the standard product. While we can’t get to excited about another new product, this new savor seems like it will be a smart, low cost alternative to obtaining a home equity line of credit (HELOC).
We got word that HUD will issue a Mortgage Letter that will include specific details about the product before September 14th.
We can’t wait.