Reverse Product Options
Our reverse portfolio offers products within these two categories: HECM, or Home Equity Conversion Mortgages, and Proprietary Reverse Mortgages
HECM (Home Equity Conversion Mortgage):
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The HECM loan is the most popular reverse option, with 90% of all reverse loans in the United States falling into this category. In the HECM category, there are two product options:
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1. HECM Line of Credit: Flexible & Growth Potential
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This line of credit option has a variable interest rate and the borrower can access funds in multiple ways. It is the most flexible product of the two HECM loans and any unused portion of the line of credit will continue to grow over time, giving the borrower access to more credit.
If there is no existing mortgage on the property, the borrower may draw on a portion of their equity or choose to keep all funds in the line of credit and access funds in the future as needed.​
​Here are the top reasons why most seniors choose the Line of Credit option:
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The borrower can typically qualify for a larger amount with a Line of Credit vs a Fixed Reverse
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If the borrower doesn’t need to immediately use all the funds available on the Line of Credit, they have two flexible options:
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They can access the available credit as needed
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Or convert the available credit into a guaranteed, tax-free income stream for life
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Also, the unused amount on the Line of Credit will grow each year, providing the borrower with access to more available credit each year.
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If interest rates decrease, the amount of interest accruing on the loan will also decrease, preserving more equity
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Lines of credit are usually the best option for homeowners with lower current mortgage balances or those who own their home free & clear.
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​2. HECM Fixed Rate Morgage: "Sure Thing"
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As the name suggests, the interest rate is fixed, and the borrower receives a one-time lump sum payout. Fixed-rate reverse mortgages are a good option if the amount a borrower can qualify for is roughly the same as your current mortgage balance and the borrower believes interest rates will rise in the future. This product does not offer a line of credit component.
The most common features of a fixed-rate reverse are the following:
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Interest rate is fixed for life, so it’s easy to calculate what the loan balance will be in the future
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If the amount of the fixed-rate reverse mortgage is higher than the current loan balance, the remaining funds would be paid as a lump sum (tax-free).
With either type of HECM loan, the amount that a borrower can qualify for is based on just three factors:
Equity
Age
Interest Rates
Once that qualifying amount is determined, a reverse mortgage specialist can help educate the borrower on whether a Line of Credit or Fixed Rate option is best to fit their needs.
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Proprietary Reverse Loans:
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Within this product portfolio, there are three products, two of which are specific to Jumbo loans (fixed-rate and line of credit), as well as a second reverse mortgage product, as outlined below.
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A proprietary (jumbo) reverse mortgage is a type of reverse mortgage designed for homeowners with high-value properties over $1,149,825. Unlike a HECM mortgage, borrowers 55 or older can convert part of their home equity into cash without selling their home or making monthly mortgage payments.
Key Features of a Proprietary Reverse Loan:
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Higher Loan Limits: Unlike HECMs with a maximum lending limit of $1,149,825, proprietary reverse mortgages can offer loans on properties of up to any value (with a maximum loan amount of $4M).
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Home Value Considerations: Like a HECM, the amount a borrower can receive from a jumbo reverse mortgage is based on the home's appraised value, the borrower’s age, and current interest rates.
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Variable Line of Credit or Fixed Rate Loans: Proprietary reverse mortgages come with either fixed or adjustable interest rates, depending on the lender's offerings and the borrower's preference.
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Costs and Fees: Proprietary reverse mortgages typically have lower closing costs vs. HECM mortgage, but usually come with a higher interest rate.
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These loans can be a useful financial tools for senior homeowners with significant home equity who want to access large sums of money for various needs, such as healthcare expenses, home renovations, or supplementing retirement income. However, due to their complexity and potential higher interest rates, it's important for borrowers to weigh the pros and cons and consider their options carefully.
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The 2nd Reverse Mortgage:
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The 2nd Reverse Mortgage is a unique product within the proprietary portfolio. It allows seniors to keep their 1st mortgage and tap into a little more of their equity to supplement their retirement needs.
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Reasons for Consideration:​
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The existing first mortgage interest rate is at historically low levels, and the borrower can comfortably make the payment.
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The borrower would like to access additional funds without an additional mortgage payment.
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Home has appreciated significantly, with access to more equity.
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The interest rate is fixed to avoid interest rate fluctuations.
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