The Fannie Mae Reverse Mortgage

The Federal National Mortgage Association (Fannie Mae) also has a reverse mortgage program. Fannie Mae's reverse mortgage program, also known as the home keeper mortgage, is slightly different than the Federal Housing Administration's home equity conversion mortgage. Fannie Mae doesn't make the loans themselves, but rather buys the loans from lenders so that lenders can quickly make a profit, provided they follow certain guidelines. Just like with almost all reverse mortgages the borrower must be:

• At least 62 years old
• Have 100% equity or close to it

The maximum lending amount of a Fannie Mae reverse mortgage is usually more than in a FHA home equity conversion mortgage and is based on mean housing prices instead of pricing in specific areas.

If the reverse mortgage is in the form of an adjustable rate loan then the Fannie Mae reverse mortgage uses Certificate of Deposits rather than Treasury Bills used in home equity conversion mortgages. Similar to other types of reverse mortgages, only the property can be looked to for repayment when the borrower passes away. If the borrower moves or sells the house then the loan must be paid back. As of 2008 under the Fannie Mae reverse mortgage program payment options include tenure, set term, line of credit. However all options might not be possible in all states, be sure to ask your counselor about which ones your state allows.

Also loan origination fees, closing costs, and service fees can all be financed as part of the reverse mortgage. Just as with the home equity conversion mortgage counseling by an approved counselor is required before being accepted. Once again, counseling is perhaps the most important part of the reverse mortgage process, since it will allow a borrower to become aware of all the options available to him or her.

Unlike the home equity conversion mortgage, a Fannie Mae reverse mortgage does not increase it's payments every year. The maximum borrowing amount does not increase as time goes on, this is in contrast to home equity conversion mortgage where the maximum borrowing amount does increase as time passes. The main advantage of a home keeper mortgage by Fannie Mae is that it allows a borrower to take a higher initial amount. Depending on the circumstances, this could aid in financial security of the borrower.

The Fannie Mae reverse mortgage or Home Keeper mortgage is another option for a reverse mortgage. Be sure to contact an approved counselor about the pros and cons of a home keeper mortgage versus other reverse mortgage options.

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