It is those refinancing into a reverse mortgage that are the most impacted by changes that went into effect October 2. Under the new rules borrowers have less access to cash and a higher minimum upfront mortgage insurance premium. The silver lining, however, is that the small group of seniors who use a reverse mortgage to purchase a home will experience benefits as a result of the changes.
Purchasing a home with a reverse mortgage, often referred to as a HECM for Purchase or H4P, is generally much easier to qualify than a traditional mortgage and have the added benefit of not requiring monthly mortgage payments. The program requires large down payment amounts – often more than 50 percent for younger borrowers and less so for older ones. At least one borrower must be 62 years or older and taxes, insurance and upkeep on the property must be maintained.
Meanwhile, buyers and those looking to refinance will find conforming no-point 30-year fixed mortgage rates averaging 3.875 percent while 15-year rates are near 3.125 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.