Home Elder Finances The Home Keeper Mortgage – Reverse Mortgage Information

The Home Keeper Mortgage – Reverse Mortgage Information

by Derrick

Since November 1996, Fannie Mae has been offering its own reverse mortgage product, the “Home Keeper Mortgage.” This is the only conventional reverse mortgage that is available on a nationwide basis. Private lenders have developed proprietary reverse mortgage products but they are generally only available in a few states.

An eligible home owner must:

  1. be at least 62 years old
  2. own the home free and clear or be able to pay off the existing debt from the proceeds of the reverse mortgage or other funds
  3. remain in the home as a primary residence
  4. attend a counseling approved by Fannie Mae

The interest rate on the loan adjusts monthly according to changes in the one month certificate of deposit index published by the Federal Reserve. Over the life of the loan the rate may not change by more than 12 percentage points. The loan becomes due and payable when the borrower dies, moves, sells the property, or otherwise transfers title. The borrowers have the option of receiving monthly payments, a line of credit, or a combination of the two.

The Home Keeper plan may also be used for home purchase. Senior homeowners may use the Home Keeper reverse mortgage to purchase homes that better fit their needs. The homeowners would make a down payment and fund the rest of the purchase price with a reverse mortgage. It would mean no monthly mortgage payments.

Under both programs, the homeowner must keep applicable property taxes and hazard insurance current, and maintain the homes in good repair. The loan would become due and payable if the homeowner fails to do either of the above.

This post was written with text from the Congressional Research Service report Reverse Mortgages: Background and Issues, April 8, 2008.

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