Understanding How a Reverse Mortgage Can Keep You at Home Longer As You Age (Part 4)

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Elder Care Attorney

For those readers following along, the previous topics we have discussed include; Financial Assessment, Non-Borrowing Spouses, and Mortgage Seasoning. This is our fourth and final discussion in this series.

Low-Cost HECM

Rising demand and marketplace competition are propelling HECM marketplace innovation. Many elderly persons believe that all HECMs are too costly, unaware that low-cost options exist with total net closing costs less than $500.

For clients who draw less than 60 percent of their available HECM principal limit during the first year, HUD lowers its Initial Mortgage Insurance Premium (IMIP) to 0.5 percent of the lesser of the home’s appraised value to a maximum value of $625,500. For many clients, that is an 80 percent reduction (from 2.5 percent to 0.5 percent) in the IMIP. The second highest closing cost, the financed origination fee, is calculated based on the home’s value and capped at $6,000. However, many lenders are reducing their origination fees or eliminating them all together. Check with your lender up front and shop around. Some lenders even offer “lender credits” to further offset most of their closing costs, resulting in extremely low-cost HECMs.

To discuss your NJ Elder Care matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.