• The HECM Saver

  • by Kristen Curzytek

If you are considering a reverse mortgage one of your options is the Saver program. The Saver program with the reverse mortgage is a good option for people who are looking to pay less in closing costs and who only need a small amount of cash. Here is some other important information about the Saver program to help you decide if it is right for you.

The Home Equity Conversion Mortgage (HECM) Saver is the one of the reverse mortgage options designed by the Federal Housing Administration (FHA). The purpose of this program is to lower the upfront loan closing costs for homeowners who want to borrow a smaller amount than what would be available with a HECM Standard loan.

With the HECM Saver you will have an upfront premium of only .01 percent of the property’s value, compared to the HECM Standard option which requires an upfront premium of 2 percent. Both the HECM Standard and HECM Saver have a monthly charge for the Mortgage Insurance Premium (MIP) at an annual rate of 1.25 percent of the outstanding loan balance. If you are looking for a Reverse Mortgage with lower upfront closing costs and do not want to borrow a large amount that would be available with the traditional standard Reverse Mortgage, then the HECM Saver is the option for you.

The HECM Saver is only available in the variable rate. What that means is the interest rate on the loan will fluctuate over time because it is based on the interest rates or index of the market.  Essentially the interest on the rate will rise and fall with market. As may know the interest rates currently being charged right now are at record lows that have not been seen in over 30 years.

The Saver program is makes sense for old Americans who are looking for a way to live a little more comfortable. For example, if you need to access a little extra cash each month you can elect to receive monthly payments or you can easily set up a Line of Credit. You will be able to use the monthly payments as you need to for bills, food or anything you want. It is like have a cushion in case you need it for something unexpected or to live a little comfortably. If you are a senior who is having trouble making ends mean meet or if you want to just have a little extra cash each month, the HECM Saver is a perfect option. You won’t accrue interest on the loan, until the first time you use it or the first payment you receive, unlike a fixed rate.

Payment options with the Saver

If you decide to choose a reverse mortgage and select the Saver program you can receive your tax-free* cash in a lump sum, line of credit, in monthly payments or a combination of any of those payments.

Benefits of the reverse mortgage program

With a reverse mortgage there are currently no income or credit score requirements. You are not required to make any more monthly and you still own your home**. You can have the peace of mind of knowing you can stay in your home for the rest of your life. This program is insured by the Federal Government so you know the program is safe and secure. The reverse mortgage program also does not affect your Social Security. However, if you are on Medicaid, any reverse mortgage proceeds that you receive must be used immediately. We recommend that you consult your financial advisor to get a complete understanding of a reverse mortgage and your benefits.

A reverse mortgage has helped many Americans stay in their home and live a better retirement. If you are 62 years old or older you could qualify for a reverse mortgage. A reverse mortgage eliminates your current mortgage*** and if you have any additional equity you can access that money in tax-free* cash.


Kristen Curzytek is a writer for Retiring Wise.  Give us a call at (800)401-8114 to talk to one of our licensed professionals. They can discuss your financial situation with you and determine if a reverse mortgage makes sense for you and your financial goals.

*Please consult with your financial advisor.

**Homeowner is still responsible for taxes, insurance and property maintenance.

***You remain responsible for counseling costs, taxes, insurance and maintenance expenses.