1 About Mortgage Market Corp Mortgage Market Corp. works with a variety of lenders and with this being one of the largest financial decision s that you will make, selecting the right mortgage program to suit your needs is just as important as your decision to purchase, getting the right information when you need it will give you the knowledge to make the right decision for you and your family. We will review your position and give you the knowledge to help you make the right decision for you and your family and then place your loan with the lender that has the right program for you. We offer various programs to help you qualify for the mortgage amount you need. We look forward to being a partner in your real estate financing process. Your partner in Real Estate Financing Since Years plus working for YOU! Our state- of- the- art system allows us to track the progress of your loan and keep it moving forward in an organized, professional manner. We stay in touch and keep you informed throughout the entire process. Together We Can: Determine how much you can afford based on your current income, budget, and savings. If you are not quite in a financial position to buy aid you in taking the necessary steps to become qualified in the future
2 Walk you through the pre- approval process- which will maximize your purchase negotiations. Partner you with an experienced Real Estate Agent who will help pinpoint your dream home based on your specific search criteria and budget. Upon meeting qualifying criteria help you obtain mortgage financing. You and Your Family Deserves The Best! Call Us! We d Be Happy To Answer Your Questions. MORTGAGE MARKET CORP NMLS# An Illinois Residential Mortgage Licensee, MB is regulated by the State of Illinois Department of Financial and Professional Regulation, Division of Banking located at 122 S Michigan Ave, Suite 1900, Chicago IL
3 How did reverse mortgage start? Roger Maris broke Babe Ruth's single- season home- run record in 1961 but like most things in life, a single act of kindness has a much longer longevity and a more widespread influence than that of fame and ironically these acts of kindness remain obscure. The earliest reverse mortgage can be traced to Nelson Haynes of Deering Savings & Loan (Portland, ME) who made the first reverse mortgage loan to Nellie Young, the widow of his high school football coach. This event was reported to be motivated by kindness and started a chain of events over the following forty years to extend a helping hand to today's retirees. Reverse mortgage helps many retirees in their twilight years to cope with their financial difficulties and help them to have a way in retaining their independence and dignity. And retirees are reaching for this solution in record numbers. According to the National Reverse Mortgage Lenders Association in 2004, lenders originated a record 37,829 HECM loans during the most recent federal fiscal year - a 109 percent increase over the 18,079 loans closed the previous year. So why would someone want to give out money to the elderly and to wait forever to get back their profits you might ask. The act of kindness may have started this
4 idea but lenders are not charitable organizations and they will not be in business long if they don't have a return on their investments. So therefore it is crucial that they take heed when calculating the amount they lend based on the value of your home, the potential of the projected appreciation, your age and a number of other factors before giving out the loans. Their profits are really the accrued and compounded interest on the money expected to be paid in full when the homeowner moves or dies.
5 Reverse Mortgages Basics Reverse mortgages are loans against your home that require no repayment for as long as you live there. As opposed to traditional mortgage loans, reverse mortgages does not require proof of income and are based solely on the equity of your home. There are no monthly payments to make as the mortgage will only due when the borrower moved out from the property or in the event of death. US seniors over the age of sixty two are eligible for reverse mortgages provided they have their own single family dwelling. No health requirement is needed, and you get to keep your Social Security and Medicare benefits if your reverse mortgage is approved. Some benefits, however, such as Supplemental Security Income (SSI) and Medicaid can be reduced under specific circumstances. Tax liability for monies received through a reverse mortgage are a non- issue, as loan advancements are not taxed, although interest on the loan is consequently not tax deductible. There are no income requirements to be eligible for a reverse mortgage loan. You may be eligible for a reverse mortgage even if you still owe money on an existing mortgage. The reverse mortgage loan must be substantial enough to pay off the existing loan completely, however.
6 The benefits of a reverse mortgage include increased cash flow almost immediately while many other options are on a fixed monthly income. This way it will fully utilize the equity value in your home. Several options exist to help seniors to plan for their advances so that they can fit into their budgetary concerns and cash flow needs. Most may feel that borrowing against their home is a risky action to take, especially when they are in their twilight years. Since they are not borrowing against future income, reverse mortgage does indeed hold minimal risk and many who choose this type of mortgage are able to enjoy what they have worked all their lives for in their post retirement years.
7 Benefits Of A Reverse Mortgage A home loan that you do not have to pay back for as long as you re alive or for as long as you live there? That sounds too good to be true, but that s what reverse mortgages do. A reverse mortgage is a loan that you make where you do not have to pay back anything for as long as you still own that property you have bought. Reverse mortgages provide you with money for you to invest. By turning the value of your home into cash, reverse mortgages gives you virtually unlimited funds without having to move and even without repaying the loan every month. There are several ways the cash is given out from reverse mortgages. You can get cash from a reverse mortgage all at once to pay off an existing mortgage, or up to 60% of the loan amount in the 1 st year as a lump sum and get the balance of the funds in the 2 nd year. With a reverse mortgage, you can also opt to receive a fixed monthly cash payout. Whether or not you want your cash from a reverse mortgage be paid to you in lump or in installment, the main thing is that you do not have to pay anything back until you die, sell your home, or permanently move. Reverse mortgages usually cater to homeowners who are 62 years old and older.
8 Reverse Mortgage vs. Other Home Loans In most other loans, a systematic check on your income and assets is done in order to pre- qualify for the mortgage. This is done as an assurance to the lender that you will be able to afford the monthly payments tied with a loan. Since reverse mortgages do not involve any monthly repayments, you not have to go through these prequalification procedures. To qualify there is no minimum income required and no monthly repayments. In every story, there is always the other side of the coin. While reverse mortgages have their advantages, they also have its ugly side. As you know already, reverse mortgages do not require monthly paybacks. This means that you are actually taking out equity from your home and turning it into cash. Here s how it works. Other mortgages require a person to make a down payment when buying a home. As years go on, they use their income to pay back the money they borrowed in making the purchase which decreases their debt and increases the value of their home. With a reverse mortgage, everything works in the other way round. You have your home. You convert its equity value into cash. And then you take out that cash as and when you need it and this will increase your debt steadily and reduce your home equity as you go.
9 This is not always the case with reverse mortgages. If your home value grows quite consistently or you only have one particular loan on your home, there s every chance that your equity could increase over time. MORTGAGE MARKET CORP NMLS# An Illinois Residential Mortgage Licensee, MB is regulated by the State of Illinois Department of Financial and Professional Regulation, Division of Banking located at 122 S Michigan Ave, Suite 1900, Chicago IL
10 Reverse Mortgage A Senior s Financial Tool Reverse mortgage is a financial tool for retiree homeowners living in their twilight years to carry on with life without having to worry about their daily expenses. But some prefer to see this as an opportunity to maximize a dream lifestyle of their choice. It is a method of acquiring cash from their home equity. By using this type of borrowing method senior citizens can come up with money that they can use any way they want without the need to pay it back during their lifetime. If these elderly Americans can qualify they can turn their home equity into money. The purpose of a reverse mortgage is to allow senior citizens the opportunity to receive the extra cash they require without the necessity of having to sell their house. The cash they get can provide them with the additional financial security they require and also give them a chance at enjoying their remaining years by reducing their money worries. There are several ways to receive this money including regular monthly payments, a lump sum or even as a credit line. A line of credit is the most common method people use to receive money from a reverse mortgage. Some retired persons get their money by using a combination of these methods. It's possible to receive monthly payments while also getting a big chunk of money up front too.
11 The term reverse mortgage is a simple way of "reversing" a mortgage. Rather than being forced to make monthly payments by taking out a home loan people can actually receive monthly payments themselves. It's a method for retired homeowners to increase their comfort of living by taking advantage of the equity they have built up in their home. The loan amount depends on many factors including the value of their residence, how old they are, how much equity is in the home along with other factors. To qualify for a reverse mortgage all applicants must be 62 years of age or older. They must also own a home (single family residence), manufactured home built on or after June 1976, town home or FHA approved condominium. And of course they must have a certain amount of home equity. It is not necessary to have the house paid off completely, but there must be equity in it. In other words you can still qualify for a reverse mortgage even if you have an outstanding mortgage loan. The loan cannot exceed the home's value, but there are no monthly income requirements and no medical prerequisites for qualification. There are few requirements, one of which is that the applicant must first meet with an approved counselor to discuss the loan or other possible options for their situation. Other than that there are very few requirements. There are no monthly income requirements and no medical prerequisites for qualifications but with one condition that the loan cannot exceed the value of the
12 property. Before approval of any reverse mortgage loans, it is required that the applicant must first meet with an approved counselor to discuss other possible options before taking up a reverse mortgage. Other than that there are very few requirements for its eligibility.
13 Understanding Reverse Mortgages Can't remember how many times I've been asked "What is a reverse mortgage"? Reverse mortgages are a great way to get a loan using your primary asset. The flexibility, of course, comes at a price. A reverse mortgage is a loan using your property and is referred to as a "rising debt, falling equity" deal. To compare reverse mortgage to a traditional one, the type of mortgage commonly used when buying a house is classified as a "forward mortgage". To qualify for forward mortgage, you must have a steady source of income. Because the mortgage is secured by the asset, if you default on the payments, your can lose your home. Your equity is the difference between the balance mortgage amount and how much you've paid. You own the house when you make your final mortgage payment. The reverse mortgage process doesn't require that the applicant have great credit, or even to have a steady source of income. The major stipulation is that the house is owned by the applicant and a minimum age is required as well, the older the applicant, the higher the loan amount. Another less known requirement is that the reverse mortgage must be the sole debt against your house.
14 In a reverse mortgage your debt increases along with your equity. Instead of making any monthly payments, the amount loaned has interest added to it - which swallows up your equity bit by bit. If the loan is over a long period of time, when the mortgage comes due, there may be a large amount owed. On the other hand, if it was to increase, this could allow for an equity gain, but this isn't typical of the marketplace. There are a few options in withdrawing the money form the loan. It can be a single lump sum, regular monthly advances, or a credit account. There are conditions in this kind of mortgage that would warrant the immediate repayment of the loan; the mortgage will be due when the borrower dies, sells the house, or moves out. Failure to pay your property taxes or insurance on the home will undoubtedly lead to a default as well. The lender can pay for these obligations to reduce your advances in order to cover the expenses. Be sure you read the loan documents carefully and in detail and also make a point to understand all the conditions that can cause your loan to become due.
15 4 Major Disadvantages of Reverse Mortgages A reverse mortgage can be an attractive option for many home- owning seniors that are having a hard time making ends meet. With a reverse mortgage, a senior homeowner will receive money for their home equity from a lender without having to make repayments for as long as they live in their home. So with the right reverse mortgage a senior homeowner can maintain their standard of living while retaining ownership of their home. There are many differences that have to be understood between reverse mortgages and traditional mortgage loans because if no effort is done, they can cause financial problems for reverse mortgage borrowers. Disadvantage No.1 - The relative cost of a reverse mortgage. Reverse mortgages tend to be costlier than a conventional mortgage. This is due to the rising- debt nature of reverse mortgages. It s important to work with a trusted mortgage advisor to make sure you have a full understanding of the costs involved with a reverse mortgage. Disadvantage No.2 - The complex and confusing contracts of reverse mortgages, that can have a tremendous impact on the overall cost of a reverse mortgage to
16 the borrower. Due to the complexities in the written contract, this often allow lenders and third parties involved in arranging reverse mortgages to not fully disclose the loan's terms or fees. These numerous other front- end and/or back- end fees can also quickly drive up the cost of a reverse mortgage. These fees include origination fees, points, servicing fees, mortgage insurance premiums, closing costs, shared equity and shared appreciation fees. Out of all these fees, the shared equity and appreciation fees should be avoided, it can raise the cost of the mortgage without providing any benefit to the borrowers. As an example, a shared appreciation fee can give a lender an automatic 50% interest in the difference between the current value of the home when the loan is signed and the appreciated value of the home when the loan is terminated. What makes the fees unfair is the fees have no relation to the amount that is borrowed. Disadvantage No.3 - The reverse mortgage payments can affect eligibility for supplemental Social Security income, old age pensions or Medicaid Senior's may not even realize this problem until after they already have their reverse mortgage, and only then do they find out that this can have the opposite effect on a seniors finances then what they were trying to accomplish in the first place by taking out the reverse mortgage.
17 Disadvantage No.4 - The fact that reverse mortgages reduce the value of a senior's assets and estate. This will largely affect the amount that will be given to the borrower's heirs when they depart.
18 Qualifying for a Reverse Mortgage To qualify for a reverse mortgage, you must be at least 62 and have paid off all or most of your home mortgage. Income is usually not a factor, and no medical tests or medical histories are required. If you seek an HECM, you also must undergo mortgage counseling from a government- approved "housing agency." Other financial institutions offering proprietary reverse mortgages require similar counseling or homeowner education. Your age becomes the major deciding factor of how much you can borrow. Apart from that the value of your home, and the current interest rate are also considered. If it's an HECM reverse mortgage, the federal law limits the maximum amount that can be paid out. You can be paid in cash on a lump sum, in monthly instalments, over a line of credit, or a combination of all three. Common Features Reverse mortgages offer special appeal to older adults because the loan advances, which are not taxable and do not affect Social Security or Medicare benefits. Depending on the plan, reverse mortgages allow homeowners to retain title to their homes until they permanently move, sell their home, die, or reach the end of a pre- selected loan term.
19 Basically, a move is considered permanent when the homeowner has not lived in the home for 6 consecutive months. So, for example, a person could live in a nursing home or other medical facility for up to 6 months before the reverse mortgage would be due. Here are some points you have to take note: Reverse mortgages tend to be more costly than traditional loans because they are rising- debt loans. The interest is added to the principal loan balance every end of the month. In other words - compounded interests. Reverse mortgages uses up a good portion or all of the equity in a home which will at the end of the day eaves fewer assets for the homeowner and his or her heirs. Lenders will charge origination fees and closing costs; some charge servicing fees which can vary from one lender to another. Interest on is not deductible on income tax returns until the loan is paid off in part or whole for reverse mortgages. Because homeowners retain title to their home, they are still responsible for taxes, insurance, fuel, maintenance, and other housing expenses in regard to that property.
20 Thanks again for downloading and reading our complimentary e- Book. We are excited to help you with any additional questions or concerns as you plan your mortgage strategy. Please call or us with any questions. You can also visit us online at:
21 MORTGAGE MARKET CORP NMLS# An Illinois Residential Mortgage Licensee, MB is regulated by the State of Illinois Department of Financial and Professional Regulation, Division of Banking located at 122 S Michigan Ave, Suite 1900, Chicago IL