Fannie Mae Home Keeper Reverse Mortgage
Fannie Mae is the largest investor of mortgages in the nation and also a major investor of reverse mortgages. This also includes the federally insured Home Equity Conversion Mortgage (HECM).
As an alternative to the HECM, Fannie Mae created the Home Keeper reverse mortgage. This was developed to address issues with individuals with higher property values, condo owners and also seniors wishing to use the reverse mortgage to purchase a new home.
Although Fannie Mae is not a lender, lenders working with Fannie Mae can offer the Home Keeper product to consumers. It is available to home owners in every state including those seeking a Utah reverse mortgage. We typically don’t use this type of reverse mortgage and we’ll go into details about this and why we don’t use this when we get a chance to discuss your options over the phone. We like to include details about the products so you know what’s available.
Property types that are eligible for the Home Keeper reverse mortgage are owner-occupied single family homes, condo units, and units in qualified planned unit developments. Properties held in trust and qualified leasehold properties are also eligible. Co-op units, however, are not an eligible property for Home Keeper.
There is a formula to determine the amount of funds available to the borrower which is based on the age and number of borrowers at the time of the application. It is also based on the adjusted value of the home and the current interest rates.
Fannie Mae’s maximum mortgage limit is $417,000 (as of 2007) which allows the reverse mortgage loans to be significantly higher than the HECM which is limited by locally applied FHA max mortgage limits.
Those that apply for a Home Keeper reverse mortgage may elect to receive the funds as a fixed monthly payment for as long as the borrower occupies the home as a principal residence, or a line of credit, or a combination of both line of credit and monthly payments.
Similar to the HECM, there is a limit to the origination fee of 2% of the adjusted value of the home and a monthly services fee of about $15 - $30. Closing costs similar to a traditional mortgage may also be assessed during the process of being approved for a reverse mortgage.
The interest rate for a Home Keeper reverse mortgage does adjust monthly and is based on an index rate, normally the current weekly average of the one-month secondary market CD rate published by the Federal Reserve. The interest rate will not rise more than 12 percentage points above the initial rate. There is no cap, however, on the monthly adjustment other than the lifetime cap.
You can use the Home Keeper reverse mortgage to purchase a new home in a single transaction which is different than the capacities of an HECM. This single transaction reduces the out-of-pocket cash needed to buy a new home and eliminates any new monthly mortgage payment and helps keep the proceeds from the sale of the old house in your pocket.
As this process would be considered unique to most circumstances, we offer additional consultation and expertise specific to your situation over the phone. We’ll help you analyze your exact situation and provide a custom solution for you. Please contact us at 800-893-9540 and one of our courteous loan officers will be able to assist you with this important decision.