HECM 100 vs HECM +100
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We previously noted the competition heating up in the reverse mortgage arena with BNY Mortgage and Wells Fargo each announcing modified Home Equity Conversion (HECM) reverse mortgage products. Both lenders recently chiseled one-half percent off the interest rate charged to senior homeowner/borrowers. HECM reverse mortgages are by far the most popular type of reverse mortgage accounting for as much 90% of all reverse mortgage originations.
The new twist on HECM reverse mortgages is good news for borrowers but also adds more options and more confusion to an already complex subject. As if trying to differentiate among the HECM, HomeKeeper, and Financial Freedom reverse mortgages isn’t enough, reverse mortgage shoppers can now add to their vocabulary the HECM 100 (BNY) and the HECM +100 (Wells Fargo)
If the names HECM 100 and HECM +100 seem just about identical, the loan terms are pretty close as well. To check out how the new HECM loan options compare with one another we thought it useful to compare them side-by-side. Thankfully, the websites for both Wells Fargo and BNY use the same underlying calculators. We ran a couple of identical scenarios on each calculator to see how the products matched up for the most popular type of reverse mortgage - the monthly-adjusting HECM. Here are the results (run 2/9/07) for a couple (birthdates 12/15/28 and 6/15/30) with a home valued at $200,000:
As you can see, the loans are identical up to the service fee set aside. BNY assesses a $35/month over the projected life of the loan while Wells charges $30/month. This difference ultimately impacts the loan amount available to you.
Of course, things do change and it always pays to compare loan terms using lender’s on-line calculators. But if you are in an area where either BNY or Wells can service you, it appears that (for now) the Wells Fargo product has the advantage. As for other HECMs offered by lenders who’ve not dropped rates, they’re really not even in the race at this point.
Article Series - hecm100
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