Mortgage Loan Qualifying

The Primary Reason for Being More Expensive is Mortgage Insurance

The HECM, Home Equity Conversion Mortgage, or HECM Mortgage as they are called is the only FHA Insured Reverse Mortgage and that Mortgage Insurance is the primary reason they are so costly. When people speak of Reverse Mortgage cons they are usually referring to Reverse Mortgage costs. There are some additional costs as well.

Why is Mortgage Insurance is Important?

There are several reasons why it is important that a reverse loan is insured. The amount available to borrow is based on three factors: borrower’s age, the interest rate and the home value. HUD uses a special reverse mortgage calculator to determine the benefit amount. The older the borrower is the more money is available! The goal is that the debt will never exceed the value of the home. In case there is a deficiency at the end of the loan, the mandatory Mortgage Insurance kicks in and pays the Lender so that borrower or their heirs will not have to. Additionally, whatever credit arrangement has been made with the Lender according to the program options is guaranteed.

HUD Determines Reverse Mortgage Costs

HUD sets the rules for how the fees are calculated and they are made up of three types of fees.

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