Borrowers who are in the process of obtaining a reverse mortgage before the principal limit changes on October 4th, can choose the 2011 HECM Standard or the new HECM Saver according to the Department of Housing and Urban Development.

Despite the annual insurance premium being increased to 1.25%, the lower rate floors for the Standard product could provide younger borrowers more proceeds under the new factors.

“Borrower’s who received a case number before October 3rd and the loan has not closed, are permitted to switch to a new 2011 HECM Standard or HECM Saver loan,” said Lemar Wooley, spokesperson for HUD in an email to RMD.

Several lenders told RMD that HUD is concerned that a slightly higher principal limit might not be beneficial to the borrower since it includes a higher annual MIP rate. For this reason, lenders must show a comparison of all three products (Traditional, Standard and Saver) to the borrower according to a notice from Reverse Vision.

The Federal Housing Administration is also releasing the HECM Saver on October 4th. The product will provide a second reverse mortgage option to consumers for the purpose of lowering upfront costs for homeowners who want to borrow a smaller amount.