HOME KEEPER REVERSE LOAN BALANCE
Finding out how your loan balance is determined starts with knowing what your loan balance is, and what it is not.   With your Fannie Mae Home Keeper Reverse Mortgage, you are given a set amount up to which you can borrow.  This amount is known as the maximum principal amount, and will not change over the life of your loan.   You will always be able to borrow up to your maximum principal, but you will only owe money on what you actually borrow. 
 
Your actual loan balance is the amount of money that you have in fact borrowed against the maximum principal as well as any other fees and loan costs that have been rolled into the loan.   These reverse mortgage fees can include things from servicing and origination fees to closing costs that were rolled into your loan, and the greater they are, the less there will be available for you to actually borrow from.   You may also be dealing with monthly servicing fees and interest that accrues on the amount that you have already borrowed so far. 
 
Your loan balance will grow each month because of the monthly loan advance that you receive as well as the fees and costs that become associated with it.   You can determine how much you have left available to you by subtracting your loan balance from your maximum principal.
 
As an example of how your reverse loan balance will grow, imagine that you are scheduled to receive a monthly payment of $200 against your maximum principal.   The first month, you will be paid the $200, and your loan balance will rise to $200 plus any closing costs or fees associated with the loan.  The next month you will be paid again, and your loan balance will rise by the additional $200 plus interest on the first month’s payment.  Your loan balance will grow thusly for the lifetime of your loan, getting larger each month as you receive your monthly payments and as you are charged interest or fees on your reverse mortgage.   You do not have to pay back the reverse mortgage until you leave your house, fail to maintain your home, or fail to pay property taxes.  
 
Feel free to contact your local reverse mortgage lender for your information.

HOW MUCH CAN I BORROW?
Fannie Mae has several different factors that it takes into consideration when they determine how much you can borrow, and these three factors include your age or the ages of your co-borrowers (if there is more than one borrower), the value of your home, and the “adjusted property value” of your home as explained below.    To get an estimate of how much you can receive, visit our reverse mortgage calculator page.
 
 With a reverse mortgage, the older you are, the more money you can receive.   Fannie Mae’s Home Keeper mortgage allows more than one borrower to be on the loan.  If there is more than one borrower, the amount you receive is generally lower, if you get a reverse home mortgage with other co-borrowers, then the payments that you receive will be lower because as a couple there is a longer life expectancy.   In the case of three co-borrowers, the ages of the two youngest people borrowing against the home will be taken into account to determine the amount that you are eligible for. 
 
The simplest of these factors is the value of your house, which automatically determined by taking the county that you live in. The more your house is worth, the more you will likely be allowed to borrow.
 
Another factor taken into account is the “adjusted property value” of your home, which is the amount of your property’s value that will actually be used in consideration of how much money will be made available to you.   This amount is determined by Fannie Mae, which sets an annual limit on the amount of cash that they will lend out based on the average home price in the United States.  The Fannie Mae organization will not purchase loans on United States home above this amount, so your loan will be based on the lesser of your home’s actual property value or Fannie Mae’s maximum loan amount.

INTRODUCTION TO REVERSE MORTGAGE FEES
There are fees associated with the reverse mortgage loan aside from the interest payments. If you have any question regarding the fees, be sure to discuss them with your local reverse mortgage lender and have them answer all of your inquiries, as you are entitled to know. Acquiring reverse mortgage loans are is perhaps one of the last critical financial decisions that you will make in your life. Therefore it is important to check out any hidden fees or costs that are not readily seen in the contract.
 
The basic charges of a reverse mortgage loan includes three types of fees: a one-time origination fee, closing costs, and a monthly servicing fee.   The origination and closing fees are payable at closing, while the servicing fee is charged monthly basis.
 
ORIGINATION FEE
An origination fee is a cost paid to your reverse mortgage lender for processing the loan application. Most origination fee is stated in the form of points. A point is one percent of the mortgage amount. This fee covers the administrative cost in preparing and evaluating the loan. The origination fee should not exceed $2,000 or 2% of adjusted property value, whichever is greater. In other words, if your adjusted property value is less than $1,000, you will not be charged more than $2,000.   If you adjusted property value is, for example, $2,000, the lender can charge up to 2% of that value, or $4,000.  Remember, these are maximums that can be charged to you, so negotiating this fee would be in your best interest. 
 
OTHER CLOSING COSTS
Closing costs are fees charged to the borrower to cover the administrative process to complete the transaction of the reverse annuity loan. The services that is covered by these costs include a title search, a title insurance, appraisal, survey, required inspection, taxes, and recording fees. These tasks are all necessary to complete the transaction and are therefore shouldered by the borrower.
 
Closing costs vary from one locality to another and varies within the locality itself due to changes in property values. It follows that higher mortgage values will demand higher closing costs.
 
There are other possible closing costs that can be associated with your reverse mortgage loan. This matrix of services includes, but may not be limited to: (a) appraisal, (b) credit report, (c) title insurance, (d) document preparation, (e) recording fees, (f) endorsements, (g) escrow/settlement fee, (h) termite inspection; (i) flood zone certification, (j) attorney’s fee, (k) intangible tax, (l) state residential funding fee, and (m) courier fees.
 
In reverse mortgage loans, closing costs can be financed through your loan balance. However, certain fees such as appraisals and infection may be classified as immediate costs due to the involvement of third party companies and should be paid as demanded. If you choose to finance these costs, there will be less money available for you and you will be compelled to pay the interest charged with the added costs. 
  
SERVICING FEE
The monthly servicing fee on your Home Keeper Mortgage covers the monthly cost of the administrative that keep your loan going.  This is a flat fee charged to the balance of your loan each month. This fee is capped by Fannie Mae but decided by your reverse mortgage lender that ranged between $15 and $35 per month.

FINDING AN “OUT” ON REVERSE MORTGAGE LOAN

 
If you feel that you cannot continue with the reverse mortgage contract after you have signed, the law gives you three business days to cancel the contract without penalty. Called right of rescission, this borrower’s right is essentially a cool-off period for people who believe they have made a bad decision. In reverse mortgage loans, the borrower has three business days, including Saturdays, to fully commit to the contract. Once you exercise your right of rescission, the lender must give up its claim to your property after 20 business days and must refund any fees you paid.
 
This is a provision in the Truth in Lending Act which protects borrowers from abusive lenders.  At the same time, this gives an “out” for borrowers who feel that they have a better deal in place with another reverse mortgage lender. This is a legal process to secure the rights of borrowers.   However, the three business day rule is a strict guideline and it is important to submit a written letter with your intent to cancel the contract. A phone call to your reverse mortgage lender won’t be enough to cancel the contract.

The Home Equity Conversion Mortgage, also known as HECM, is the most popular type of reverse mortgage loan. What makes the home equity conversion mortgage so popular?

HECM Explained
The various payments options, low interest rates and the fact that it is the only reverse mortgage insured by the Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development, are just a few reason why HECM loans are the most prevalent.Of all the reverse mortgages, HECM loans generally provide the most sizeable loan advances and a variety of ways for you to get paid by the reverse mortgage lender.  HECM loans are also relatively inexpensive when compared to other reverse mortgages .

HECM ELIGIBILITY
In order to apply for a home equity conversion mortgage, the reverse mortgage borrower(s) must

• Be at least 62 years old;
• Live in any of the 50 states, District of Columbia or Puerto Rico
• Be a homeowner with some equity in the home; 
• Be living in a qualifying home as his/her primary residence

The HECM loan allows any homeowner listed on the title to be eligible granted that the above factors are met.  The FHA, however, calculates the loan based on the youngest qualifying borrower if there are multiple people on the title.

HECM PROPERTY REQUIREMENTS
The following types of homes are eligible for a home equity conversion mortgage:

• Single family residence in a one to four unit dwelling; OR
• Condominium; OR
• Part of a planned unit development (PUD); OR
• Manufactured home (Varies. Consult a loan specialist to find out more information)

REPAYING YOUR HECM
Similar to that of most reverse mortgages, the home equity conversion mortgage loan only needs to be repaid when the last surviving borrower leaves the home.   There are of course a couple of exceptions that would require immediate payment, which include:

• Failing to maintain the property, allowing it to deteriorate without correcting the problem (reasonable wear and tear is acceptable)
• Failing to pay property taxes and/or insurance These situations are of course dependent on the borrower.  If you keep your property in good shape and property taxes and insurance current, you will not have to repay a dime until you leave your home, all on your terms.  

LOAN AMOUNT
The amount of money a reverse mortgage lender loans to you depends on a few factors.  These factors include the borrower’s age, current interest rates, current home value as well as the location of the home.  The Federal Housing Administration (FHA) limits the amount of money HECM lenders can loan to reverse mortgage borrowers based on the county that the property is located.  These values are defined in Section 203b of the National Housing Act.  The limits generally changes annually in January, but may change anytime during the year.

In other words, the reverse mortgage lender cannot lend more money than the lending limit of your county, even if your house appraises for higher than the limit.  So if your house appraises for $300,000, but your county’s lending limit is $245,000, you will still be eligible for a HECM loan.

However, the amount of money you receive would be the same as if you home was valued at $245,000. And finally, the final factor that determines the reverse loan amount you receive depends on the type of payment plan you choose (lump sum, line of credit or a combination). 
 

HECM FEES
Generally, most reverse mortgage home equity conversion mortgage loan fees can be paid for with the current equity in your home.  The difference between the loan amount and the loan fees is for you to spend on anything you would like. Most of the fees associated with a reverse mortgage includes orgination, servicign, mortgage insurance premium (MIP) and interest.
 

ORIGINATION FEE
 The origination fee for a reverse mortgage covers the preparation and processing cost of the loan.  The Federal Housing Administration (FHA) limits the amount a reverse mortgage lender can charge for origination fees to no more than 2% of the maximum claim amount.  If 2% of the maximum claim amount ends up being less than $2,000, the lender can only charge the borrower up to $2,000 in origination fees.