The New Reverse Mortgage
Recently the National Reverse Mortgage Lenders Association (NRMLA) started a pilot program to highlight some major changes to Reverse Mortgages. We are still talking about the HECM (Home Equity Conversion Mortgage) with rules by FHA - just like nearly everything else on this site.
There have been major changes in 2014 to prompt them to do this. In a flyer they put out titled The New Reverse Mortgage: A Smart Choice, they recap and explain 'What's New?'
- It's safer for you. Some new limitations help preserve your home equity
- Rates and fees are lower than you might expect. Depending on the lender and how the loan is structured, the new reverse mortgage may compare favorably with home equity loans and lines.
- Financial advisors are looking at the line of credit choice, with its growth feature, as a way to expand choices in long term retirement strategies.
- Your heirs are more clearly protected. In another publication, they highlight that there has been a change in how much of the balance has to be paid by heirs if they wish to keep the home. Or how heirs may walk away from the loan without having to make up any shortage if the home sells for less than the loan amount. Of course, if it sells for more, the heirs receive the excess.