We look at 15-year mortgages, house hacking and more.
What is Home Keeper?
Home Keeper was a Fannie Mae reverse mortgage program that allowed older homeowners to borrow against the equity in their homes. Anyone 62 or older who either owned his home free and clear or had very low mortgage debt was eligible. The program was discontinued in 2008.
Fannie Mae’s Home Keeper was a conventional reverse mortgage loan that helped older homeowners convert equity in their homes into cash. Seniors who were looking to tap into residual income that lay in the value of their homes benefited from a Home Keeper reverse mortgage. One benefit of Home Keeper was that it had higher lending limits than the Federal Housing Administration’s Home Equity Conversion Mortgage, or HECM.
There were a few ways in which borrowers could receive their payments:
- Scheduled equal monthly payments.
- A line of credit, or unscheduled payments to the borrower whenever the borrower requested a disbursement.
- A combination of equal monthly payments and a line of credit.
To qualify for Home Keeper, homeowners had to, among other criteria:
- Be at least 62 years old.
- Live in the home full time.
- Have equity in a home that needed no more than 15 percent of its value in repairs.
- Take out at least $50,000 but no more than $417,000.
- Own a single-family home, condo, co-op, or two- to four-unit residence.
When Congress increased the loan limits for the HECM program in 2008, Fannie Mae decided to discontinue Home Keeper, saying it no longer saw a need for it.
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Home Keeper example
When Home Keeper was a viable federal reverse mortgage program, senior citizens who had paid off their mortgages could tap their equity and get cash payments. Let’s say a 75-year-old widow owned a home worth $175,000. The house did need some repairs, but they did not total 15 percent or more of her home value. The widow decides to tap $50,000 of her equity through a Home Keeper reverse mortgage loan. She opts for equal monthly payments. The income helps pad her very tight budget.