There are Three Reverse Mortgage Options to Choose From:

1.     1 HECM Adjustable

The Adjustable Rate Mortgage (ARM) is tied to the LIBOR index and is updated monthly.  A “margin” is added to the LIBOR index and that creates the annual interest rate that is charged on the outstanding balance.  The ARM option offers clients the most flexibility.

• The senior can receive monthly income,
• The senior can take a disbursement at the time of closing,
• The senior can have the funds available in the form of a Line of Credit to use on an as needed basis, or
• The senior can have a combination of any of the above!

Additionally, should the client’s needs change in the future, the set-up of the loan can be changed at any time for a nominal fee (currently the charge is about $30 to make a change).

Finally, you should know that any unused portion of funds (the money that is available but hasn’t been taken yet) actually appreciates at 1.25% HIGHER than the rate that is being charged on the used portion.  Under certain circumstances, this can be used as an excellent estate planning tool and could leave a bigger estate to your heirs than just the value of the home.  Essentially, over time it is likely that the Line of Credit is worth more than the value of the home itself!

2.      HECM Fixed

The Fixed Rate program is not as flexible at the ARM, but it does offer a rate that will never change.  With the Fixed program, the only option for disbursement of funds is Lump Sum.  The Fixed Rate is often used when the purpose of the money is already known.  As an example: If the Principle Limit (or Loan Size) is $100,000  and the senior has a $85,000 mortgage lien that needs to be paid off, then after the original mortgage is paid, the senior would have $15,000 left over to save or spend however they like.

3.      HECM Hybrid

This is a relatively new option that combines the Fixed and the ARM.

Summary

Each program can then be modified further to your specific needs.  Your New Mexico Reverse Mortgage expert will show you how to qualify for a reverse mortgage, answer your questions and help you select a loan program that best suits your needs.