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A New Approach Required: Selling the Adjustable HECM



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With the expected suspension of the fixed rate standard product comes the need to adjust our approach with prospective borrowers. For those of you watching who were in the industry before the fixed rate the adjustment should come easier. For those who have primarily focused on the fixed rate or feel that’s the product seniors strongly prefer it may be more challenging. Here are five tips for promoting and educating prospects about the adjustable rate HECM.


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  1. Would be interested to know how you would approach subject when Reverse is used for home purchase and all available is used immediately?

  2. Shannon,

    What a great overview!! Adjustable rate HECMs are a great product. Your points are well taken.

    When explaining the interest rate issue, the adjustable rate loan app docs provide a short overview of the history of the index in the last decade. That seems to calm a lot of nerves even though the senior is quick to point out that things were different all not that long ago. To which a reassuring comment that they are very correct never hurts. To which most state that I have a valid point as well, moving them off of the fear “dime.”

  3. The adjustable rate loan will not be a problem if a meaningful cap is put into place. Some seniors can remember when rates went to 21.5 %. In all cases the client will not lose their home if they maintain it however if rates take off, and looking back 10 years does not cover that because history of interest rates in the past does not guarantee what the future will hold. If rates take off and later the home is back in the system the insurance fund will take a major hit!! It is time to take a look at the qualify income to maintain the home, That is the issue.

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