Harbor Mortgage Solutions, Inc. of Braintree, MA has announced the availability of a new reverse mortgage program, the HECM 100. The HECM 100 is a FHA/HUD insured Home Equity Conversion Mortgage (HECM) that features an interest rate that is one-half percent lower than the current HECM reverse mortgage program rate.
Harbor Mortgage President, Chris Downey commented, “This is a significant breakthrough in the reverse mortgage marketplace. The HECM 100 enables senior homeowners to be eligible to receive greater cash benefits up front along with lower interest costs over the life of the loan. The one-half percent rate advantage will carry forward for the life of the loan.”
Federally insured HECM reverse mortgages account for more than 90% of the reverse mortgages currently in effect in the United States. The amount of funds that a senior homeowner is eligible to receive under this program is based on a formula that takes into consideration four basic factors:
1. The age of the senior homeowner (or the age of the youngest spouse in the case of couples, with the minimum age being 62).
2. The current market value of the home.
3. Current interest rates.
4. FHA established county lending limits.
What does half of a percentage point mean to a consumer? For a 70 year old senior who owns a home valued at $300,000, the HECM 100 will mean that this homeowner could receive approximately $13,000 more in cash upfront from the proceeds of the loan than with the traditional HECM. Additionally, at today’s interest rates, the senior homeowner, or their heirs, would also save approximately $28,000 in interest costs over the expected life of the loan under the terms of the HECM 100 reverse mortgage program.
The Reverse of Traditional Thinking
A reverse mortgage, essentially the opposite of a traditional or “forward” mortgage, can enable seniors to tap into accumulated equity without having to face ongoing payments. Unlike traditional mortgages where borrowers make monthly payments, in a reverse mortgage the cash flow is reversed, and the lender makes payments to the borrower. This enables borrowers to use the tax free cash they receive in any way that they wish with no monthly payments due to the lender.
There are no minimum income, asset, or credit qualifications to meet and no effect on Social Security or Medicare benefits. The property must be the primary residence of the borrower and adequately insured and maintained, with real estate taxes kept current. As long as the borrower continues to live in the property the loan can never be called. Repayment is required if the home is sold, or when the last borrower permanently leaves the property, or passes away. At that time, the heirs can sell, or refinance, the property to pay off the loan.
Once the province of a few small banks and private lenders, the great majority of reverse mortgages today are provided through government-sponsored programs, namely the HUD/FHA Home Equity Conversion Mortgage (HECM) and the Fannie Mae Home Keeper (HK) programs.
Customized Harbor Mortgage Solutions
Specializing in conventional residential and reverse mortgages, Harbor Mortgage Solutions, Inc. is located at 100 Grandview Road, Suite 105 in Braintree, MA.
Originally established in 1978, Harbor is led by its Founder, George Downey, his son, Chris, President, and a staff of highly experienced mortgage professionals. Harbor Mortgage Solutions is dedicated to providing customized service, obtaining the best possible solution for each individual client, every time. An equal opportunity lender licensed in Massachusetts (license #MC0041) and Rhode Island (license #20041821LB)
For additional information on services offered by Harbor Mortgage Solutions please call 781-843-5553 or 800-599-8700, or visit www.HarborMortgage.com.
