There are 5 basic types of Reverse Mortgages. A brief description of each follows. I will start with the most popular version and end with the least used type. Each requires all borrowers to be at least 62 years of age. There are minimum property standards however this is rarely a problem in California. The amount of your benefit is determined by the initial interest rate, your attained age and the value of your property. The older the borrowers the greater the benefit since you have a shorter life expectancy.

1. FHA Monthly H.E.C.M. (Home Equity Conversion Mortgage) This loan is insured by FHA/HUD. Your benefit is guaranteed for as long as either borrower lives. The FHA HECM has the lowest effective interest rate, currently 1.50% above the One Year T-Bill index.  Your benefit is calculated using FHA's maximum Loan Amount in your county of residence. In San Diego County that is $362,790.00.  The "Monthly" mean the interest floats up or down monthly. This has no effect on your benefit once the loan is closed.  This is the most popular Reverse Mortgage since it has the lowest rate and the highest benefit when applied to most homes valued at $750,000 or less.

2. FHA Annual H.E.C.M. Basically the same as the monthly HECM however it has an annual rate cap of 1.0% up or down and floats 3.10% over the 1 year T-bill index. It has a maximum rate increase of 5.00% for the life of the loan. Again, rate fluctuations do not affect your benefit once the loan is closed. This loan will give a lower benefit than the monthly because of the higher interest rate.  It is sometimes chosen because of the Interest rate caps.

3. FNMA (Fannie Mae) Home Keeper.  This is a conventional (Non Government Insured) Reverse Mortgage.  The interest rate on this version floats 3.40% over the one month C.D. index.  Because of it's higher rate the benefit is usually less than either

of the FHA versions. It does have significantly lower closing costs that either of the Government Insured FHA loans. (H.U.D. / F.H.A. charges you  a 2% insurance fee up front which is deducted from your initial loan proceeds.)

4. Cash Account. This is a conventional product designed for home with higher values although it can be used on any value home.  The interest rate on this version is significantly higher than any of the preceding. It floats 5.00% above the 6 month

LIBOR (London Interbank Offering Rate) index.

5. Cash Account - Zero Points. Same terms as #4 above but the initial fees are the lowest of any reverse mortgage. This version does require that you take a substantial cash advance at closing so it is not ideal for everyone.  We find this version used most frequently by the very elderly who require expensive care and do not expect survive more than a few more years.

To get additional information call Ken Terrill at 800-481-9999 ext. 118 or e-mail to: ken@ampy.com