The implementation of a financial assessment tool is now imminent for reverse mortgage applications.
After Wells Fargo recently exited the business, citing borrower tax defaults as a major reason, the issue has been front and center for industry execs.
There is talk about a uniform 50% debt to income ratio being applied to all new reverse mortgage applications. Debt to income ratios would be assessed after the benefit of the reverse mortgage proceeds were taken into account. Your monthly scenario could look somthing like the following.
Before the reverse mortgage:
$1000 mortgage payment (including taxes and insurance)
National Reverse Mortgage Lenders Association Co-Signs Letter Request for Loan Limit Extension
The letter, seeking a one-year extension of current FHA mortgage loan limits, was written by several trade associations and points out the ”tight underwriting already constraining mortgage availability.”
Current FHA lending limits are set to adjust back to normal on September 30 of this year after having an upward adjustment that allowed borrowers to get more money out of thier refinances, pay off higher mortgages and purchase more expensive homes. The upward adjustment has greatly benefitted all of the 11 organizationa that signed the letter as well as the stalling econimic recovery.
Reverse Mortgage with Credit Line Feature
With all of the changes in reverse mortgages these days, it pays to review your options again, if you are in the process of applying for one. The most popular program today is the fixed interest rate, lump sum pay-out program due to the amount of funds available to the borrower usually being greater with this option. It’s no secret that most home owners will want to get the most money available these days and probably because they need to pay off an existing mortgage but what if your home is free and clear of any mortgages? The other option is an adjustable interest rate reverse mortgage or the lower paying HECM Saver. Again, most borrowers might want to gravitate to the peace of mind that comes with a fixed interest rate but what if the rate on your loan was tied to the amount of funds available for future payments to you? In this case, you might get an unexpected bonus if and when interest rates rise. That is exactly what happens when you choose the adjustable interest rate option on your reverse mortgage.
It’s really a personal decision as to whether or not to chose the newer MIP of 1.25% vs. .50%. If you have the choice, the newer loan with the higher MIP will yield more money, as stated in another post but what will be the difference in the ongoing costs? They will be higher but how much? Simple math will fix this and make your decision much easier.
Current loan note rate 5.56%
Plus current MIP .50%
Total Annual Rate 6.06%
New loan note rate 4.99%
Plus new MIP 1.25%
Total Annual Loan Rate 6.24%
As predicted by some, the lowest, fixed rate, reverse mortgage is quickly becoming the “go to” product for the industry. Boasting the highest pay out to the borrower and the lowest fixed rate available, the product has the added benefit of a note rate lower than the new HECM expected interest rate. By lowering the expected rate on the new HECM, HUD provided an unexpected benefit to the borrower along with the unfortunate higher MIP tacked-on to the ongoing fees in the program.
Recent Posts
- Reverse Mortgages for the Elderly
- Reverse Mortgage Scam, Scare
- Reverse Mortgage Borrower Assessment Explained
- Fragile Housing Market Cannot Handle Imminent Lower Loan Limits
- Reverse Mortgage, Now Is The Time
- Reverse Mortgage Purchase Popularity Gains
- Reverse Mortgages for Free and Clear Homes
- 4.99% with 1.25% MIP or 5.56% with .50 MIP?
- 4.99% Fixed Rate Reverse Mortgage Prevails
- FHA Reverse Mortgage Fees Change Again
- Reverse Mortgages Expected Interest Rates Lower
- Dumbing Down Loan Officers
- Reverse Mortgage Counselors Fail
- Reverse Mortgage Concepts Pays Up Front MIP
- Free Reverse Mortgage Counseling
- FHA Insured Reverse Mortgage Monthly Premiums to Rise
- Lowest Reverse Mortgage Fees
- Unlicensed Loan Officers Still Operating in Arizona
- Top 10 Disadvantages of Reverse Mortgages
- Reverse Mortgages and Annuities
Our Reverse Mortgage Products
FHA Insured Home Equity Conversion Mortgages
HECM FIXED 4.00
HECM FIXED 4.25
HECM FIXED 4.50
HECM FIXED 4.75
HECM FIXED 4.99
HECM FIXED 5.49
HECM FIXED 5.56
HECM FIXED 5.68
HECM FIXED 5.81
HECM FIXED 5.99
HECM LIBOR 1.75
HECM LIBOR 2.00
HECM LIBOR 2.25
HECM LIBOR 2.50
HECM SAVER LIBOR AND FIXED
Welcome!
You have found a Reverse Mortgage Specialist with knowledge, experience and integrity. Michael Manfredi is a fully licensed, bonded and HUD approved Reverse Mortgage Lender. He represents several national Reverse Mortgage Banks and has over ten years experience in Reverse Mortgage lending.Michael Manfredi
(602) 456-0009
NMLS License 150754Cities We Have Serviced
Apache Junction, Arizona
Anaheim, California
Avondale, Arizona
Buckeye, Arizona
Bullhead City, Arizona
Camp Verde, Arizona
Casa Grande, Arizona
Carefree, Arizona
Cave Creek, Arizona
Chandler, Arizona
Chino Valley, Arizona
Claypool, Arizona
Cornville, Arizona
Cottonwood, Arizona
Fountain Hills, Arizona
Flagstaff, Arizona
Gilbert, Arizona
Glendale, Arizona
Globe, Arizona
Gold Canyon, Arizona
Goodyear, Arizona
Green Valley, Arizona
Lake Havasu, Arizona
Litchfield Park, Arizona
Mesa, Arizona
Miami, Arizona
New River, AZ
Paradise Valley, Arizona
Payson, Arizona
Peoria, Arizona
Phoenix, Arizona
Pinetop-Lakeside, Arizona
Prescott Valley, Arizona
Safford, Arizona
Scottsdale, Arizona
Sedona, Arizona
Show Low, Arizona
Snowflake-Taylor, Arizona
Sun City, Arizona
Sun Lakes, Arizona
Surprise, Arizona
Tempe, Arizona
The Villages, Florida
Tonopah, Arizona
Tucson, Arizona
Wickenburg, Arizona
Yuma, Arizona

