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Overview With GNMA’s recent announcement, HECM ARMs using LIBOR as their Index will soon not be viable to originate. While LIBOR has been destined to be phased out for some time, this unexpected announcement will require a faster transition than was expected. The framework around SOFR, the anticipated replacement to LIBOR, has not been fully developed yet, and as such... Read Full Article
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For several years, adjustable rate reverse mortgages used a variety of indexes which determine a benchmark interest rate that when added to a margin set by the lender, would determine the final interest that borrowers would accrue on their loan. The rules for the choice of an index is that it had to be out of the lender’s control... Read Full Article
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The outbreak of the COVID-19 coronavirus in the United States has universally disrupted the regular, daily lives of Americans as well as the nation’s economy. As the risk of infection and the possibility of hospitalization, particularly for older Americans, has led to orders from federal, state and local governments that encourage “social distancing” in an effort to slow the... Read Full Article
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One of the key questions that always surrounds any reverse mortgage is how much money you, as the borrower, will be able to draw from the loan. The amount of money you can get from the proceeds of a reverse mortgage is primarily based on two important factors: your age, and the loan’s interest rate and margin. Typically, older... Read Full Article
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Most people are aware that they receive a percentage of their home's value or the Government lending limit (whichever is less) based on their age when qualifying for a Reverse Mortgage loan. However, what many consumers are not aware of is the effect of the "Expected Interest Rate" as it correlates to their available proceeds on a Reverse Mortgage loan.... Read Full Article
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If you’ve made the decision to stay in your home, but you’re not sure if your savings will last, a reverse mortgage could be a potential solution to help you achieve that goal. But different reverse mortgage types can serve different purposes and as with any mortgage, you must consider which program and rate option are best suited for you. Just like... Read Full Article
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Fixed Rate Reverse Mortgages – which is right for you? Many senior borrowers have been raised on the idea that a fixed rate loan is the “only way to go”. Still others remember back to the early 80’s when interest rates climbed as high as 18%. Some borrowers experienced rising interest rates from adjustable rate loans (or knew others who... Read Full Article
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Once you have decided that a reverse mortgage is right for you, it’s important to look at the amortization schedule. What is a reverse mortgage amortization schedule? A reverse mortgage amortization schedule is a document that will provide a best estimate of how the loan could grow over time. Unlike a traditional loan, a reverse mortgage is a negative amortized... Read Full Article
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What Rising Interest Rates in 2018 Mean for Reverse Mortgage Borrowers Interest rate increases impact reverse mortgage borrowers differently from how they impact forward mortgage borrowers. While gains in short-term rates have a minimal effect on the amount of loan proceeds reverse mortgage borrowers may be eligible to receive, hikes in longer-term rates can significantly reduce their borrowing power over... Read Full Article
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Can the loan balance grow beyond the value of the house? I thought there was a cap of 60% of the value of the house? There is no "cap" on the amount of interest that can accrue. In many cases, especially if the value of the home declines as they have done in recent years, the balance of the reverse... Read Full Article