ReverseMortgages.com, Inc. A Guide to Reverse Mortgages

Transcription

1 ReverseMortgages.com, Inc. A Guide to Reverse Mortgages

2 Table of of Contents Introduction Our Commitment to You Is a Reverse Mortgage Right for You? Getting Your Reverse Mortgage: Questions & Answers How a Reverse Mortgage Works: A Step-by-Step Process Scenario Fees Contact Us Table of Contents

3 Introduction Growing Pains: When your income is fixed, but the cost of living is not. Before today, you probably had an idea of what you wanted your retirement to be like or things you wanted to be able to do for yourself or your children. But, with the rising cost of living, thousands of homeowners like you are finding it harder to get the financial freedom they deserve. We have a few questions for you: Do you want a more comfortable retirement? Have you always wanted to be free of a monthly mortgage payment? Are medical bills and other expenses piling up? Would you like to worry less about money so you can enjoy your life more? If you answered yes to any of these questions, a reverse mortgage could be a great choice for you. In this guide, you will learn about how obtaining a reverse mortgage can help you reach your personal and financial goals and why choosing us means you are choosing the safest, most reliable reverse mortgage company. As you are reading, we encourage you to call your reverse mortgage specialist to help walk you through the information. Your reverse mortgage specialist can help apply what you have read to your specific situation, as well as give you the most current rates and offers. Most of all, you can count on us every day to help you make decisions that will benefit you. Together, we can help you achieve the lifestyle you deserve. Introduction 2

4 Our Commitment Table of Contents to You Getting a Reverse Mortgage You have dreams for retirement, but money challenges can cloud your dreams overnight. That is why the United States government created a new kind of mortgage exclusively for seniors. It is called a reverse mortgage and it is the first mortgage where the bank pays you! How does this work? The governent recognized a need for seniors to be able to use the equity in their homes and still live in their homes for as long as possible. If you qualify, the equity you have spent years building can be paid to you in monthly installments, in one lump sum, or as a line of credit. Here is the best part: you never have to make a monthly mortgage payment for as long as you live in your home. Our promise makes us the right choice for you. We know that reverse mortgages bring a lot of questions to mind about security, stability, ownership and risk. That is why we promise to provide you with the resources and information you need in order to make confident choices about your financial future. 3 Our Table Commitment of Contents to You

5 Our Commitment to Introduction You We promise: You own your home - not the bank. We promise that you will maintain ownership of your home as long as you live in it - with no time limit.* You can refinance whenever you want - with no penalty. We promise we will never ask you to pay a penalty for satisfying your mortgage at any time. You will be treated with respect every step of the way. We promise to listen, to answer questions fully, and to help you make the decision that is best for you. We will be here to help long after your loan is closed. *A reverse mortgage requires that the homeowner remain current on their homeowner s insurance, real estate taxes and home maintenance. Our Commitment Introduction to You 4

6 Is a Reverse Mortgage Table of Right Contents for You? What does retiring better mean to me? There are a lot of reasons to obtain a reverse mortgage, but they all have one thing in common: a reverse mortgage helps give you financial security. If you have worked hard for a comfortable retirement, but the cost of living is getting in the way, a reverse mortgage can help. Here are some of the best reasons for getting a reverse mortgage. You would like to stay in your home, but you cannot afford it. Your income is fixed, but the cost of living is on the rise. Gas prices, the cost of food, and other monthly bills make everyday living difficult to enjoy. If rising expenses are pushing you out of your home, a reverse mortgage may be the answer. You could get the money you need to cover your expenses and live comfortably in the home you love. Subsidizing health care. Good health is your first priority. But with the rising cost of prescriptions, office visits, and in-home care, many retired homeowners are finding it harder to afford. The way we see it, there is no better reason for a reverse mortgage. We can help you get a handle on your medical expenses by not only eliminating your monthly mortgage payments (taxes and insurance are still your responsibility), but replacing that expense with additional funds. Some of our clients use their reverse mortgage to help pay for prescriptions, pay for in-home care for themselves or a spouse, make improvements or updates to their home, or pay medical bills. Home improvements. Are your plans for your home bigger than your budget? Home improvements and repairs can be expensive. A reverse mortgage can give you the same advantages as a home equity loan without an additional monthly mortgage payment. 5 Is Table a Reverse of Contents Mortgage Right for You?

7 Is a Reverse Mortgage Right Introduction for You? Lifestyle enhancement. When you planned for retirement, did you plan for high gas prices? What about rising food prices? If you are like most of us, your vision for retirement was a lot different than what you can afford with the rising cost of living. A reverse mortgage can help get that dream back for you - whether you want to travel, visit family or just live comfortably. Supplement your income. If you are not yet retired but are not making enough to cover the rising cost of living, a reverse mortgage can be a great supplement to your income. Why be forced to downsize when you can live better in the home you love? Some of the best reasons for getting a reverse mortgage: Subsidizing health care Home improvements Lifestyle enhancement Supplement your income Help family members Help family members. Had you hoped to send a family member to college? Had you hoped to help your family with growing expenses? A reverse mortgage is a great financial tool to help you do any of that. Remember, your proceeds can be used however you wish. Is a Reverse Mortgage Right for You? 6

8 Getting Your Reverse Table Mortgage: of Contents Q&A You have questions; we have answers. Your reverse mortgage specialist can answer all of your questions at any time, but this should help you get started. Do I qualify for a reverse mortgage? If you are thinking about getting a reverse mortgage, there are a few basic requirements. Here is your checklist: You must own your own home. You must be 62 or older. You should have a good amount of equity built up in your home; a reverse mortgage specialist can tell you exactly how much. Qualify under FHA s financial assessment. Let us get into a little more detail. Age requirements can sometimes cause the most confusion, raising questions like: What if my spouse is not yet 62 years old? Can one of us qualify? Here is the rule to remember: If your name is on title to your home, you must be 62 to qualify for a reverse mortgage. So, if you re married or you coown your home with another person and you want both of your names on the title, you must both be 62 years old. If one of you is not yet 62 years old, you can consider dropping their name from the home s title in order to meet the standards for a reverse mortgage. Be sure to speak with your reverse mortgage specialist about the implications of this option and what you can do to ensure the individual removed from title is protected. 7 Getting Table of Your Contents Reverse Mortgage: Q&A

9 Getting Your Reverse Mortgage: Introduction Q&A Your Payment Options A line of credit Monthly payments for as long as you live in your home or a predetermined, shorter time frame A combination of monthly payments and a line of credit. An up-front lump sum payment. Your reverse mortgage specialist will help you determine if you have enough equity in your home to qualify for a reverse mortgage. Still have an outstanding balance on your first mortgage? You could still qualify. Call an expert today for answers. Your primary residence is the only home eligible for a reverse mortgage, and you must be living in your home to qualify. Homes that are eligible for a reverse mortgage are the same as with a regular mortgage, including: Single-family homes FHA-approved condominiums Townhomes FHA-approved manufactured homes 2- to 4- unit owner-occupied residences What can I do with the money I receive? You can put the money toward any expenses you have - there are no limitations. As with any home loan, it is best to use it where you need it most: medical bills, home repairs, in-home care, balancing the cost of living, or a more comfortable lifestyle. Consult your financial advisor to discuss the best use of your reverse mortgage funds. How do I find out how much I can receive? The amount of money you can receive every month is based on the qualifications discussed above: your age, your home s current value, and the equity you have built up in your home. Another factor is how you elect to receive your funds. Your reverse mortgage specialist is a great resource for everything you need to know about your reverse mortgage and will be able to give you more specific information regarding the amount that you qualify to receive. Getting Your Reverse Mortgage: Q&A 8

10 Getting Your Reverse Table Mortgage: of Contents Q&A You have questions; we have answers. How much does it cost to get a reverse mortgage? Many of the costs you would find with getting a regular home loan also apply to reverse mortgages. Fees you might see are: an origination fee, a mortgage insurance fee, an appraisal fee, and settlement costs. In most cases, the costs can be financed as part of your reverse mortgage. Are there different reverse mortgage programs? How will I choose? When you obtain a reverse mortgage, you do have different disbursement options. Your reverse mortgage specialist will work with you every step of the way to match you with the option that fits you best. Your Benefit Checklist Get funds for as long as you live in your home. No loan repayment for as long as you live in your home. Never worry about making monthly mortgage payments. Choose the payment option that suits you. No restrictions on how you use your money. When do I pay back my loan? As long as you are living in your home, you will never make a single monthly mortgage payment again. However, taxes and insurance are still your responsibility. When you no longer occupy your home as your primary residence, the loan becomes due. For your protection, the repayment amount will never be more than the value of your home due to the non-recourse feature of this federally insured loan. Selling the home is not the only option for repayment; you always have the option of paying off the loan in full and keeping the home. 9 Getting Your Reverse Mortgage: Q&A

11 How a Reverse Mortgage Introduction Works If you are like most reverse mortgage clients, you want to be prepared. That is why we have outlined the reverse mortgage process. Remember: your reverse mortgage specialist is here to help you every step of the way. There are five easy steps to closing your loan. 1. Our first meeting. During your first talk with your reverse mortgage specialist, we will take a good look at your current financial situation to see if a reverse mortgage is right for you. We will go over the qualifications and your home loan options to see if you are a good match. Do not forget to ask questions! Your reverse mortgage specialist will give you the honest answers you need to make the best decision. 2. Attending counseling. Before securing a reverse mortgage, you are required to receive independent counseling from a HUD-approved financial counselor. This is to help you make sure you are in the right position for a reverse mortgage. Your counselor is another great resource to answer all of your questions so that you feel confident with your decision. Counseling can usually be done right over the phone. 3. Your appraisal. Together with your reverse mortgage specialist, you will schedule your home appraisal for a time that fits your schedule. The appraiser will determine the market value of your home, make sure it is in good repair, and check for any repairs that you may need. How a Reverse Mortgage Works 10

12 How a Reverse Table Mortgage of Contents Works 4. The underwriting. Underwriting is a part of any mortgage process. After the appraisal and preliminary docs are complete, an underwriter will review your complete file in order to ensure that everything is properly documented and all qualifying guidelines are met. 5. Closing! Are you ready to finally achieve the lifestyle you deserve? At closing, you will sign all of your final loan documents. Now you will never make another monthly mortgage payment again as long as you live in your home. However, you must still pay taxes and insurance. You can pay medical bills, fix up the house, help send grandchildren to college, or simply enjoy life! If you have any questions throughout the process your reverse mortgage specialist is here to help. Call for answers to all of your reverse mortgage questions. 11 How a Reverse Mortgage Works

13 Scenario: Bill and Introduction Linda Bill and Linda are married with two children and they own their home. Their home is worth $150,000 and in good condition. They have two mortgages with a combined outstanding balance of $32,000 and their mortgages cost a total of $670 every month. Bill and Linda call us to learn about the reverse mortgage options available to them. Their reverse mortgage specialist is able to tell them that they qualify for three basic scenarios based on their ages, home value, and current interest rates. An initial lump sum amount of $18,400 A line of credit with a $52,000 limit, including a growth feature A monthly disbursement of $150 The costs involved in a reverse mortgage transaction are similar to forward mortgage loan products. Typically, there is an FHA premium, third party fees, and the cost of the company s services. There may also be an origination fee. Bill and Linda have chosen to finance their costs as part of the loan so as to avoid any out of pocket expenses. After discussing their options with their reverse mortgage specialist, their HUD-approved financial counselor, their family, and each other, Bill and Linda decide that a line of credit best suits their needs. They decide to use the proceeds of their loan to pay off their existing debt and cover the costs of their medical needs, while leaving a significant amount available on their line of credit to use as needed. After paying off their mortgages, their outstanding debts, and their medical costs, Bill and Linda have eliminated $950 of monthly payments from their budget and still have additional funds available to them to use at their discretion. Scenario: Bill and Linda 12

14 Scenario: Bill Table of Contents and Linda Any remaining balance accrues interest based on the loan s interest rate. Bill and Linda are not required to make any monthly mortgage payments to reduce the balance or offset the interest for as long as they live in the home and remain current on homeowner s insurance, real estate taxes, and home maintenance. After ten years, Bill passes away and Linda continues to live in the home without being required to make any payments on their reverse mortgage. Four years later, Linda also passes away. During the course of the preceding 14 years, Bill and Linda did not make any further withdrawals. Bill and Linda s children decide to sell the home. Scenario 1 Scenario 2 The home has lost a great deal of value and they are only able to sell it for $80,000. Bill and Linda s children send the net proceeds from the sale of the home to repay the mortgage, but are not required to pay the remaining balance. This balance is paid by the Federal Housing Administration, and the loan is considered satisfied. The home s value has increased and they are able to sell it for $215,000. After repaying the mortgage and costs associated with selling the home, the remaining funds go to Bill and Linda s estate. This example is for illustrative purposes only. Please contact a reverse mortgage specialist for more information. 13 Scenario: Bill and Linda

15 Fees Introduction The fees associated with reverse mortgages are well-defined and strictly regulated. These costs can usually be financed as part of the mortgage transaction so as not to be paid out of pocket. When you receive your reverse mortgage disclosures, you will receive a document called the Good Faith Estimate (GFE). This document outlines the fees your originator anticipates will be paid in the process of obtaining your reverse mortgage. The originator of your reverse mortgage is allowed to charge you only one fee for the service of originating the loan and is not allowed to charge separately for services that are inherent to the process of origination. For example, you should not pay both an origination fee and a processing fee to your originator, but rather one or the other. The originator of your reverse mortgage is also limited in the amount that they can charge for their services. The amount that can be charged by the company who originates your loan is based upon the appraised value of your home: For values up to $125,000: Origination can equal up to $2,500. For values over $125,000: Origination can equal up to 2% of the first $200,000 plus 1% of anything above that amount, but cannot exceed $6,000. Fees14

16 Table of Contents Fees You will also see fees that are payable to third party companies whose services are required during the origination of your loan. You may see a credit report fee, appraisal fee, closing or settlement fee, document preparation fee (this is a legitimate fee only when charged by the title company), title insurance, courier fee, etc. The rule of thumb in assessing whether the fees you are being charged are legitimate is to determine whether the fees can be directly linked to a specific service that has been provided during the course of creating your reverse mortgage. In addition to the fees paid at closing, you will see an up-front mortgage insurance premium, which is equal to 2.5% or.5% of the value of your home depending on the principal limit utilization, and is paid to the Federal Housing Administration. If you have any questions about any of the fees or the up-front mortgage insurance premium that are charged at closing, do not hesitate to contact your reverse mortgage specialist for clarification. 15 Fees

17 Contact Introduction Us If you have any questions throughout the process, your reverse mortgage specialist is here to help. For answers to all of your reverse mortgage questions, contact us today W. Broadway Business Park Ct., Ste 213 Columbia, MO Toll Free ( ) Monday-Thursday 8 a.m. to 6 p.m. Friday 8 a.m. to 5 p.m. Central Time or visit: NMLS # These materials are not from HUD or FHA and were not approved by HUD or any government agency. Contact Us 16

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