Interest Only Payments
My client, a 64 year old single woman who owns several investment
properties plus her primary residence was feeling the pinch of
declining property valuations and rental income impacted by the
current economic conditions.
She contacted me to discuss her options with the Reverse Mortgage as
she did not want to take a chance that her ability to pay the
mortgage on her primary residence might be a challenge if the
declines in rental income continued. We discussed her various
options for Reverse Mortgage programs and she elected the HECM
Standard offering an interest rate of 4.05%*.
Her greatest concern was the rising debt offsetting retained equity
over time. As such we reviewed the Amortization Schedule which
reflected that the on-going monthly interest + FHA Mortgage
Insurance Premium charges would be approximately $435.00* per month.
She knows she can make that payment, and her plans are to treat her
Reverse Mortgage as an 'interest only' loan to minimize the
increasing loan balance.
The realization that she could make prepayments without penalty have
greatly eased her mind that if she elects to sell her primary
residence in a few years, that she will be able to realize a greater
margin in retained equity. Another satisfied client!
*This is an example that may not currently have the same criteria.
Results will vary based on borrower's age, current interest rates,
home value and FHA maximum limits. Ask me to quote a similar
scenario for you or one of your clients.
