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HECM reverse mortgages that are assigned HUD case numbers on or after Monday, October 4, 2010, will have their ongoing Mortgage Insurance Premium (MIP) increase from 0.50% per annum to 1.25% per annum. MIP is not interest, but it affects loan balance accruals the same way, so this is effectively an interest rate increase of 3/4 of one percent.

Principal Limit Factors on the 'HECM Standard' will also be changing. You'll be pleasantly surprised to see that with today's low HECM 'Expected Rates', many folks will enjoy a Principal Limit increase. The table below shows the October 4th changes in the HECM Standard's Principal Limit. You can see that for a 70-year old borrower, if the Expected Rate is 5.06% or less, Principal Limits will be 6.9% higher with the new pricing -- that's $10,750 more on a $250,000 home.

Expected Rate Age of Youngest Borrower
 From To 62 65 70 75 80 85 90 95
1.00% 5.06% 10.1% 9.1% 6.9% 5.3% 2.9% 1.4% 0.4% -4.2%
5.07% 5.18% 6.4% 5.3% 4.2% 2.7% 0.9% -0.3% -0.9% -5.4%
5.19% 5.31% 3.2% 2.2% 1.5% 0.6% -1.1% -2.0% -2.3% -6.8%
5.32% 5.43% 0.4% -0.5% -1.0% -1.5% -3.2% -3.3% -3.4% -7.8%
5.44% 5.56% -2.5% -2.6% -3.1% -3.3% -4.7% -4.6% -4.3% -8.6%
5.57% 5.68% -2.4% -2.5% -3.1% -3.5% -5.1% -5.2% -4.9% -9.4%
5.69% 5.81% -2.6% -2.7% -3.5% -4.1% -5.7% -5.7% -5.5% -10.1%
5.82% 5.93% -2.9% -3.1% -3.9% -4.6% -6.1% -6.1% -5.7% -10.6%
5.94% 6.06% -2.6% -3.0% -4.3% -4.8% -6.2% -6.3% -6.2% -11.2%

HUD is also introducing a new product, the 'HECM Saver', which has a minimal Upfront MIP, and accordingly lower Principal Limit Factors. Upfront MIP is only 0.01% of the home value (versus 2.00% on the HECM Standard) and is capped at $62.50. That means that on a $250,000 home, upfront MIP will be only $25 rather than $5,000  -- that's $4,975 less in upfront costs -- a big savings. With Expected Rates of 7.06% or lower, the HECM Saver, compared to the new HECM Standard, gives Principal Limits that range from 15.5% lower for a 62-year old to 21.4% lower for a 90-year old borrower. This will be a great product, especially for those who are planning on re-locating within five years.

If you are not using the RMCA / Ibis Sandbox or RMCA Counselor Locator you should request log-in privileges at The Sandbox fulfills the HECM pre-counseling requirements and has an identifier number. The Locator has a number unique to your organization. When your client reads one of these numbers to a counselor, the lender's products will be used in the counseling session. The lender is not identifiable to the counselor -- just the selected products and pricing is known. Sessions will be much less confusing as both your client and their counselor will be discussing the same numbers.

The next page provides estimates of benefits from several reverse mortgage programs and compare the 2010 factors to the 2011 factors. These estimates are not an offer to make anyone a loan, nor do they qualify anyone to obtain a loan. Your privacy is of utmost importance to us. None of the information you enter here will be shared or retained.

How much money is available from your home? To find out answer these questions:

You can use your "Tab" key to move from box to box. $ signs and commas are not needed -- just enter numbers. Note that all borrowers must be 62 or older (or within 6 months of their 62nd birthday.)

1) What is your ZIP code?
     Enter just 5 digits, not ZIP+4.
     Then click the 'Find It' button >>
     State: California
     County: San Francisco
  Month   Day   Year
2) When were you born?
      For example: type 5 for May.
  Month  Day Year
3) When was your spouse
      (or other co-owner) born?
      Leave blank if you are the only owner.
4) How much is your home worth?
      Type in your best guess.
Optional Input Fields:
5) Mortgages and liens on your home
6) Monthly payments on your mortgages
7) Other upfront cash you desire
8) Estimate any necessary home repairs
9) Your desired line-of-credit

Make your entries, then click 

To start a new estimate, click 

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