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Fixed rates return to reverse mortgagesMany older homeowners prefer reliable, dependable mortgage interest rates. It helps them plan their monthly financial calendars, especially when they are battling the challenges of paying for health care on fixed incomes.Fixed-rate mortgages have been absent from the reverse-mortgage scene for more than decade, as lenders relied primarily on adjustable-rate mortgages insured by the U.S. Department of Housing and Urban Development. These mortgages, known as Home Equity Conversion Mortgages (HECMs), account for nearly 85 percent of the reverse market. BNY Mortgage, which recently announced it would trim the interest rate charged on the adjustable-rate HECM, introduced two fixed-rate reverse-mortgage products on March 5. The first, called the New Generation HECM, is similar to the current FHA/VA rate and hovers near 6.5 percent, not including the mandatory mortgage insurance premium. The interest rate is tied to the one-year CMY, or constant maturity treasury index. The second product, the Fixed Prime Advantage, is a "jumbo" product for loans greater than $405,000. The rate, which will be set at closing, is the prime lending rate plus .99 percent. That rate recently was a tick over 9 percent. "By offering more options to seniors, we feel strongly that we are making reverse mortgages more accessible for today's senior homeowners," said Sarah Hulbert, executive director for BNY Mortgage's western regional center. "Seniors who previously were put off by the adjustable-rate options will now have fixed-rate options, and seniors who previously did not qualify for a reverse mortgage due to insufficient loan proceeds will now be eligible." Reverse mortgages allow senior homeowners, with a minimum age of 62, to receive proceeds from a lender -- either in a lump sum, regular monthly payments, a line of credit or in a combination of those options. When the house is sold, or the last remaining borrower dies or moves out of the home, the loan amount plus the accrued interest is repaid. The borrower can't owe more than the value of the home. The HECM program has insured more than 240,000 reverse mortgages since 1990, while private "jumbo" reverse plans also have been available. Homeowners needing to sell their home visit 888SOLDin9 to talk with our Jacksonville FL partner about their personal financial situation. Our Jacksonville FL partner, Jim Tallent buys, sells, renovates and rents homes and properties in Jacksonville FL, Duval County FL and surrounding areas. click here for article |