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Does Less Fees, Mean Less Money?
Does Less Fees, mean Less Money?
(The Benefits of the HECM Saver)
Reverse Mortgages are a possible tool for senior who wish to live comfortably during retirement. Unless it has been used as a last resort, however, senior homeowners have been largely skeptical of the reverse mortgage, choosing to exclude it in their retirement plans because of the high costs associated with it.
In 2010, the “Standby” Reverse Mortgage was introduced as a cost effective alternative to seniors hoping to obtain a reverse mortgage. The benefits of a HECM Saver include:
Lower Up-Front Costs. Firstly, amount of equity that can be borrowed with a “Standby” Reverse Mortgage is about 10-18% less than with a Standard Reverse Mortgage. As an added benefit, the up-front fees on the Mortgage Insurance Premium--which ensures that the borrower doesn’t have to pay more than the value of their home—decreases from 2% to 0.01% (which is over $12,000 savings on the max value of $625,500). A non-cancellable line of credit. As opposed to a Home Equity Line of Credit—which requires minimum payments and runs the possibility of being frozen, canceled or reduced (like in the 2007-2009 recession)—the HECM Saver line of credit cannot be canceled. Also, the line ... more
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