Side-By-Side Comparison
Home Equity Conversion Mortgages (HECM) are federally insured reverse mortgages. The Home Keeper Reverse Mortgage was Fannie Mae’s version. HECMs and Home Keeper Reverse Mortgages differed mainly in flexibility, loan limits, eligibility, and availability.
Flexibility
The Home Keeper Reverse Mortgage offered three payment options: line of credit, tenure, and modified tenure. The HECM tends to be somewhat more flexible, with all three options plus an additional two: term and modified term. A line of credit is a convenient option for homeowners who want to borrow large sums against the equity of their house. Tenure is paid out monthly as long as at least one of the owners lives and occupies the home as a primary residence. Term is paid for a fixed number of months. Modified term and modified tenure add the benefit of a line of credit.
Loan Limits
Home Keeper’s maximum loan amount was determined based on a number of factors, including property value and the owner’s age. The HECM has an overall cap of $625,000 as provided for by the economic stimulus package. This means that even if your home is appraised at a higher value, $625,000 is the maximum amount you can borrow.
Eligibility And Availability
Eligibility is somewhat more restricted for an HECM than for the Home Keeper Reverse Mortgage. A home qualifying for an HECM must be a one- to four unit home, or a unit in a Planned Unit Development (PUD) project or condominium, or a leasehold property that meets U.S. Department of Housing and Urban Development’s (HUD) guidelines. Manufactured housing and condos qualify if they are approved by the Federal Housing Administration (FHA). Home Keeper loans accepted any of the homes mentioned above, as well as qualifying properties that are held in trust. It should be noted, however, that although the Home Keeper Reverse Loan has been around since 1996, Fannie Mae announced the discontinuation of the product on September 3, 2008.
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