Louisiana HECM

HUD Creates a HECM Savers Package: How this Package Affects the Louisiana HECM

Couple enjoys their aniversary with funds from a Louisiana HECM

A new package recently introduced by HUD will have a positive effect on those who are seeking a Louisiana HECM (Home Equity Conversion Mortgage) or more commonly, the reverse mortgage. This new program will help many seniors who have previously been hesitant to take advantage of the Louisiana HUD reverse mortgage.

What is a Louisiana HECM Loan?

The Louisiana HECM loan is a reverse mortgage that is insured by the federal government through HUD (Housing and Urban Development). A Louisiana HUD reverse mortgage allows homeowners who are at least 62 years old to access the equity in their homes for many different reasons including meeting daily expenses and paying health care costs. They can do this while they still live in their homes and do not have to make mortgage payments as long as they continue to live in their homes.

Prior to the introduction of the Louisiana HECM loan many seniors were forced into leaving their homes or taking on equity loans in order to access the cash value of their homes. Unfortunately the latter also meant an additional monthly payment, and the homeowner would have to qualify with sufficient income and good credit. A reverse mortgage has no income or credit requirements although the homeowner does have to be able to pay the property taxes and insurance on the property.

HUD Changes: What it Means for Louisiana HECM Policies

In September of 2010 the Federal Housing Administration (FHA) announced its intention to offer a modified version of its Home Equity Conversion Mortgage, referred to by the acronym HECM or its common name, reverse mortgage. The purpose of the modification is to allow more seniors to take advantage of the Louisiana HECM without the drawback they previously experienced: closing costs on a reverse mortgage. The HECM Saver is a second mortgage option that lowers the closing costs a homeowner must pay upfront. This option is attractive to those homeowners who want to borrow a smaller amount than they would be able to do with a standard HECM loan.

Provisions of the HECM Saver: How it Benefits Louisiana HECM Borrowers

For many years the name of the reverse mortgage insured through HUD was called a HECM but the new provisions now require the need for a name change. Those homeowners looking for a Louisiana HECM will now have the option to choose between the HECM Standard and the HECM Saver. The changes were necessitated by the need to provide services to those seniors who felt the fees connected to the HECM Standard were too high for them. This new HECM Saver package makes the idea of a Louisiana HECM more attractive to those seniors who are not interested in obtaining all the cash from their homes, an option that is unavailable under the HECM Standard program. One substantial savings involves almost eliminating the upfront cost for the Mortgage Insurance Premium. The new option will be available to any new Louisiana HECM cases opened after October 4, 2010.