The Advantage of a HECM Fixed Advantage
Days after Reverse Mortgage Funding announced it’s plans to offer borrowers the HECM Choice, the fixed-rate reverse program product since HUD eliminate the fixed-rate Standard back in April, Live Well Financial, Inc. unveiled its new product, the HECM Fixed Advantage. According to an article published by Reverse Mortgage Daily, the HECM Fixed Advantage allows borrowers to withdraw the remaining funds of their reverse mortgage 12 months after closing, instead of periodically via term or tenure payments
. As with the HECM Choice, borrowers must withdraw 60% of their principal limit at closing. In essence, the HECM Fixed Advantage is the same product as the HECM Choice, with one crucial difference. To me, this signals a continued trend of introducing new reverse mortgage products after HUD implemented the changes this past September 30, with one catch: the new product is only offered by one lender.
Whether this is for monitoring purposes or practicality, the fact of the matter is, there will now be two available fixed-rate reverse mortgage products, for borrowers who like, and yearn for, stability as far as their interest rate is concerned. The main draw of these new fixed-rate product is the fact that borrowers aren’t obliged to draw all of their funds in the form of a lump sum at closing, which was one of the disadvantages of a fixed-rate despite it’s stable interest rate. Even more important is the fact that consumers now have a choice if they prefer to have all their funds at hand as soon as possible.
For those who wish to have a steady monthly paycheck for the rest of their retirement, there is the HECM Choice. For those who want to withdraw their funds as soon as possible, there is the HECM Fixed Advantage. I think the introduction of these two products demonstrates that, while it may have taken some time to see the bigger picture, HUD is looking for a way to stabilize the program and bring back the popular products of the past, under the new rules. The HECM Fixed Advantage will only be offered by Live Well Financial, Inc. upon its introduction to the market and the HECM Choice will only be offered by Reverse Mortgage Funding, as far as we know.
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