Florida Reverse Mortgage
January 8, 2009
The Home Equity Conversion Mortgage HECM (Florida Reverse Mortgage) is the oldest, and the most well known reverse mortgage program. Since 1989, HECMs are federally insured by the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development also known as HUD. The amount of available proceeds you can qualify for under the HECM loan program will depend on your age, appraisal, and current mortgage interest rates. The older you are, and the more equity you have in your home, the more funds you will be able to receive. The maximum loan limit is $417,000. If your home is worth more than $417,000, the amount of equity you are eligible to receive will be based on $417,000. If your home is worth less, then the loan amount will be based on the lower appraised home value.
Many of the upfront fees associated with the HECM are capped by FHA. Currently, you will pay a mortgage insurance premium MIP equal to 2 percent of the maximum claim amount (the value of the home or $417,000, whichever is less), plus an annual premium thereafter equal to 0.5 percent of the loan balance. The MIP is paid directly to FHA in exchange for guaranteeing the loan. The MIP guarantees that if the company managing your account commonly called the loan servicer goes out of business, the government will step in, and make sure you have continued access to your loan funds. Furthermore, the MIP guarantees that you will never owe more than the value of your home when the HECM must be repaid.
Under the HECM loan program, which accounts for most reverse mortgages made in the US, the origination fee equals 2% on the initial $200,000 of maximum claim amount (lesser of the home value or county lending limit) and 1% on the balance thereafter with a cap of $6,000. In addition to these two primary fees, you will also pay other standard closing costs associated with getting a mortgage, including title insurance, attorneys fees, recording taxes, etc. The HECM loan program is widely used Florida Mortgage program in the state of Florida.
