What Was the Reverse Mortgage Saver Program?

The reverse mortgage saver program was an initiative that was introduced in 2010 by the United States Department of Housing and Urban Development (HUD) to offer an alternative to the standard home equity conversion mortgage (HECM), which is a reverse mortgage that’s backed by the federal government. The reverse mortgage saver program, dubbed HECM Saver, was introduced to help reduce borrowing costs for homeowners who wanted to borrow smaller amounts than those allowed for a regular HECM, which was newly classified as HECM Standard.

Un🥂derstanding the Reverse Mortgage Saver Program

A reverse mortgage is a financial arrangement in which a homeowner borrows against their 澳洲幸运5开奖号码历史查询:home equity without taking out a traditional hom⛎e equity loan or home equity li🥀ne of credit (HELOC). A 澳洲幸运5开奖号码历史查询:reverse mortgage company provides the homeowner a 澳洲幸运5开奖号码历史查询:lump-sum payment, a series of installment payments, or a 澳洲幸运5开奖号码历史查询:line of credit. Interest and fees accrue on the amount received.

As long as the homeowner uses the home as their 澳洲幸运5开奖号码历史查询:principal residence, they pay nothing to the reverse mortgage company. If the homeowner sells the property, moves out, or dies, then the reverse mortgage balance comes due, including the principal borrowed, interest, and fees.

澳洲幸运5开奖号码历史查询:Home✨ equity conversion mortgages (HECMs) have several associated costs, including:

• Interest
• 澳洲幸运5开奖号码历史查询:Mortgage insurance premiums (MIPs)
• 澳洲幸运5开奖号码历史查询:Origination fee
• 澳洲幸运5开奖号码历史查询:Closing costs
• 澳洲幸运5开奖号码历史查询:Servicing fee

When HECM Saver was introduced, a HECM Standard had an up-front MIP of 2% and an annual MIP of 1.25%. HECM Saver lowered the up-front MIP to 0.01% but kept the annual MIP the same.

The purpose of HECM Saver was to make HECMs for borrowers who wanted to withdraw smaller amounts of equity from their homes. Borrowers who wanted to take out larger amounts of equity still had the option to use HECM Standa꧃rd, paying higher up-front MIPs in exchange.

Special Considerations

HECM Saver was eliminated in 2013, taking the appellation HECM Standard with it. This was done as part of an effort to streamline and strengthen the HECM program to make it easier for homeowners to borrow againಞst their equity.

In its current for𝕴m, the HECM program insures reverse mortgage loans for borrowers who meet all of these requirements:

• Are age 62 or older
• Own their homes outright or have paid off most of their mortgage
• Are not 澳洲幸运5开奖号码历史查询:delinquent on any federal debts, including taxes or student loans
• Have financial resources and income to pay for 澳洲幸运5开奖号码历史查询:homeowners insurance, 澳洲幸运5开奖号码历史查询:property taxes, 澳洲幸运5开奖号码历史查询:homeowners association fees, 澳洲幸运5开奖号码历史查询:maintenance, and upkeep
• Live in an eligible property that’s used as a principal residence

For 澳洲幸运5开奖号码历史查询:Department of Housing and Urban Developme▨nt (HUD) and 澳洲幸运5开奖号码历史查询:Federal ⭕Housing Administration (FHA) purposes, eligible properties include single-family homes and two-, three-, and four-unit homes if the borrower lives in one of the units. Homeowners who live in townhouses, condominiums, and mobile homes may get approved if the home meets FHA requirements.

Homeowners are required to attend 澳洲幸运5开奖号码历史查询:HUD-approved counseling. They must also pay the various costs associated with HECMs, including MIPs. As of October 2024, HECMs have an up-front MIP of 2% and an annual MIP of 0.5% of the mortgage balance.

The Bottom Line

The HECM Saver program was a popular alternative to standard HECMs since it made it more affordable for homeowners to borrow smaller amounts against their home's equity. However, the program was discontinued in 2013 in order to make the HECM program easier to use.