Transamerica Homefirst, a large player in reverse mortgages, announced changes in its programs that will give borrowers more money.
A reverse mortgage, usually offered to senior citizens, gives the borrower a lump sum or monthly payments while he or she continues to live in the house. The loan is paid back when the borrower vacates the home, sells it, or dies.
A change to one loan, the House Money Cash Account, now allows 5% annual interest to accrue on the unused part of the borrower's credit line.
Two changes to the San Francisco-based lender's Lifetime House Money plan offer borrowers monthly income whether or not they remain in their homes, plus a lump-sum advance and a reserve account. The fixed interest charge on this plan was reduced to 9.95%. In addition, the unused portion of the reserve account will accrue 5% interest to the borrower annually.
The two reverse mortgages are available to borrowers 65 or older in California, Connecticut, Florida, New Jersey, New York, Pennsylvania, and Washington who have homes valued at $75,000 or more.
Separately, Transamerica is bringing its reverse mortgage product to Illinois. The Illinois plan will allow homeowners to continue to receive monthly cash advances even if they leave their home.
"Our plan provides older homeowners with continuing monthly income when they may need it most - at that stage in their lives when health or other changing circumstances might force them to move out of their homes," said Peter Mazonas, president and chief executive officer of Transamerica Homefirst.