Reverse Mortgage Facts & Answers to Frequently Asked Questions

Transcription

1 Reverse Mortgage Facts & Answers to Frequently Asked Questions Access Reverse Mortgage Corporation Toll-Free 2999 Tyrone Blvd N St. Petersburg, FL NMLS #4566 FL #MBR656 TN # These materials are not from HUD or FHA and were not approved by HUD or a government agency. Access Reverse Mortgage Corp. is not in any way affiliated with HUD/FHA. The inclusion of various information, references, links, materials & logos are not an endorsement of Access Reverse Mortgage Corporation or any of its employees or business partners by HUD/FHA or any government agency.

2 What is a Reverse Mortgage? A Reverse Mortgage (also known as a Home Equity Conversion Mortgage or HECM) is a special type of home loan, designed specifically for borrowers age 62 or older. The loan enables homeowners to convert a portion of the equity in their home into cash-without having to sell their home or make monthly mortgage payments. As with a traditional home equity loan or conventional mortgage, borrowers will still need to continue paying their property taxes, required property insurance and any required association fees or ground rents; and maintain the property. Failure to do so may result in foreclosure. Many borrowers use a Reverse Mortgage to supplement or delay Social Security, meet unexpected medical expenses, make home improvements, provide security against unexpected events, or to make retirement dreams a reality. The money can be used any way you wish. Does the Reverse Mortgage lender take title to the home? No! Just like any other mortgage, you retain title to your home. Your home will remain part of your estate.* *Borrowers must continue to pay property taxes, insurance and any required association fees or ground rents; and maintain the property. Failure to do so may result in foreclosure. How much money can I get with a Reverse Mortgage? The FHA-insured HECM (reverse mortgage) has a formula to determine the amount you are eligible to borrow. The amount available is dependent on several factors: 1. Age of the youngest borrower (or the younger spouse if one is under age 62) 2. Appraised value of the home 3. Current interest rates, and the margin offered by your lender These factors determine your Principal Limit Factor, or PLF. This represents the maximum amount FHA has determined you may borrow with a Reverse Mortgage.

3 Out of this amount, all existing liens must be paid off, as well as any fees/costs associated with your loan. Remaining funds can be accessed in a few different ways. 1. Lump Sum (limited to 60% of PLF in the first year) 2. Line of Credit 3. Monthly Payment TO THE BORROWER (Term and Tenure available) 4. Combination of the three options above For a detailed quote showing how much you may be eligible to borrow, please contact us today at or use our online calculator. What are the closing costs for a Reverse Mortgage? Costs associated with a reverse mortgage are similar to those for a traditional mortgage. Generally speaking, the only out of pocket cost in obtaining a Reverse Mortgage is for the appraisal and required reverse mortgage counseling. Manufactured homes may require special inspections and certifications. Other costs can generally be financed as part of the loan. The structure of your loan should be based on your overall goal for the property. Ask your loan originator for a comprehensive comparison of the available products and the interest rates and fees associated with each one. Can you do a Reverse Mortgage on a manufactured home? Yes, in most cases it is possible. There are criteria that must be met in order to do the loan, but Access Reverse Mortgage Corp. has closed many Reverse Mortgages on manufactured homes. Can you do a Reverse Mortgage on a home valued over $625,500? Yes. There is no limit to the home value for a Reverse Mortgage. However, the FHA-Insured Reverse Mortgage uses a maximum value of $625,500 in the calculation to determine the amount you are eligible to borrow. In other words, a borrower would be eligible to borrow the same amount whether their house appraised at $625,500 or $1,000,000. There are non-fha Reverse Mortgages, often called Jumbo Reverse Mortgages available that are not subject to the $625,500 limit. These loans are useful in certain situations, but the terms are generally not as

4 favorable as with an FHA-Insured loan. Borrowers seeking a Jumbo loan should expect higher interest rates and lower loan-to-value ratios. When does a Reverse Mortgage become due and payable? Loan balance and changing home values have nothing to do with the loan becoming due and payable. Loans are only due and payable when a repayment event listed in the application or closing package occurs. Examples of these events include: 1. The last surviving borrower passes away or sells the home. 2. All borrowers move out of the home permanently. 3. The last surviving borrower fails to live in the home for 12 consecutive months due to physical or mental illness. 4. The borrower fails to pay property taxes or insurance. 5. The borrower allows the property to deteriorate beyond what is considered reasonable wear and tear, and does not correct the problems. Can I sell my home after getting a Reverse Mortgage? Yes! Just like with any other mortgage, if you decide to sell, you have an absolute right to do so. Proceeds from the sale will first be used to pay off your current loan balance. Any remaining funds are yours to keep. There is NO PREPAYMENT PENALTY with an FHA-Insured Reverse Mortgage. How will a Reverse Mortgage affect my estate? None of your other assets are affected by a Reverse Mortgage loan. If your estate would like to sell the home, they have up to 6 months to do so, with two 90 day extensions available, provided they are making a bona fide effort to sell. If the home is sold for more than the loan balance, any remaining funds go to the estate. If the loan balance exceeds the current appraised value, the estate can sell the home and FHA insurance will pay the shortfall to the lender. There is NO PERSONAL LIABILITY over the current appraised value of the home. Should your heirs desire to keep your home, they would be required to repay either 95% of the current appraised value of the home, or the loan balance, whichever is less.

5 How long does it normally take to complete the Reverse Mortgage process? It depends in large part on the company you chose to work with. Reverse Mortgages have developed a reputation for taking months to close. This is not the case when you work with an experienced provider whose only focus is reverse mortgage borrowers. Our record from application to closing is 8 days, but more commonly the process takes about 4-5 weeks. Purchase loans can take a bit longer, but still average about 5 weeks from start to finish. We have transferred and quickly closed many loans from lenders who have been trying to close the loan unsuccessfully for several months. How do I get a Reverse Mortgage? A good first step is to talk with a Certified Reverse Mortgage Professional (CRMP) to discuss what options are available that may fit your current situation. There are 10 Certified Reverse Mortgage Professionals in Florida and just over 100 nationwide. We employ three CRMP s here at Access Reverse Mortgage Corp. who would be happy to discuss your available options by phone or face-to-face, with no obligation to proceed, and no pressure from us to make a decision. Once you have discussed the available options with a CRMP, we will provide you with a list of several HUD-Approved Counseling Agencies. All reverse mortgage borrowers are required to complete a counseling session with a non-biased third party. The counseling is for the protection of the borrower; ensuring that you have been given accurate information, and that you understand the Reverse Mortgage program. After you have completed your counseling session, you will meet face-to-face with a licensed loan originator who will walk you through your loan application. If you decide you would like to move forward, you will sign the application and your loan originator will leave a copy with you so you can review it at any time. You are not "locked-in" to anything at this point. You have an absolute right to change your mind up until closing on a purchase loan, and until 3 days after closing on a traditional refinance loan. Should you decide not to proceed, your only expenses are those that you have incurred already such as the counseling fee, or potentially an appraisal. Once we have your signed application, we will apply for your FHA Case Number then order your appraisal. Per FHA rules, all appraisals must be ordered through an

6 appraisal management company (AMC). We submit the order to the AMC, and the AMC then assigns an appraiser who will contact you to schedule an appointment to visit your home. The appraiser is typically there for only minutes to take pictures and check for any obvious deficiencies. The appraiser will complete their report and send it back to the AMC for review before it is finally sent to us. The appraised value is used to determine your available funds from a Reverse Mortgage. After we have your appraisal, we can submit your file to underwriting for approval. Everything is reviewed by the underwriter who makes a decision on loan approval. Once the underwriter has approved the loan, it goes to the closing department and we schedule your closing. Closings can be completed at a location of your choice. Most borrowers chose to have the closing in the comfort of their own home and there is no additional cost to do so. Reverse Mortgages are complex loans and it is important that you work with an experienced company. As a borrower, you will not be involved in most of the processing as it is completed behind the scenes and you will receive status updates on your loan s progress along the way. Where can I get a Reverse Mortgage? The Reverse Mortgage industry is made up of three different types of companies/originators. The first category is composed of the large national lenders that you see on television, often with paid celebrity endorsements. These companies spend millions on advertising, and primarily operate as high volume call center operations. They may have a local representative, who will meet with you to take your application, but once that is done; your file is usually shipped off to a different state where your loan becomes just one of hundreds of loans in process. If you have questions about progress, you would generally call an 800 number and speak to the next available operator. There may be a lack of focus on customer service, and a heavy focus on closing as many loans as possible, often with higher fees and interest rates to cover the high level of operating expenses and marketing costs. The next type of company is the "forward" mortgage lender or broker that offers Reverse Mortgages on the side. Any licensed loan originator is legally allowed to offer Reverse Mortgages; there is no other license required. These companies typically close only one or two Reverse Mortgages each year. As we mentioned earlier, these

7 loans are very complex in terms of processing. An inexperienced originator or processor can cause costly delays, and even unnecessary denials. The third category is made up of local or regional companies whose sole focus are the Reverse Mortgage borrower. These companies are locally owned and operated and they only offer Reverse Mortgages. Processing is done on site and the processors are easily accessible by phone, , or face-to-face. If you have questions about your loan, you can call a local number and talk to a live person who is familiar with your particular case. These companies spend very little on advertising and are almost strictly referral based. These savings can be passed along to the customer, so fees and interest rates are often lower than you will find elsewhere. About Access Reverse Mortgage Corp. Access Reverse Mortgage Corp. is a family-owned company based in St. Petersburg, FL. We have been operating out of the same location for 10 years and employ three of the ten Certified Reverse Mortgage Professionals in the state. Our processing is done on site and the department is headed up by our company President, Pamela Tennant. Our loan officers all have years of experience demonstrating the highest level of ethical conduct and outstanding customer service. Vast Experience We are a company of Reverse Mortgage Specialists-highly knowledgeable professionals with many years experience in helping seniors find the right Reverse Mortgage solution for their particular needs. We understand that our clients are each unique in their concerns and dreams. We know there is a great deal of misinformation out there regarding Reverse Mortgages, and we believe that we are responsible for ensuring that our clients have all the answers and expert advice they need to make well informed decisions. Broad Plan Selection We offer a wide range of FHA-Insured Reverse Mortgage products and margins including Fixed Rate, MAX5/CAP5 Monthly Adjustable, Annual Adjustable, and more. From this selection, we can recommend the Reverse Mortgage plan best suited to your personal requirements or circumstance, including such factors as low rate, low closing costs, fixed rate, and highest proceeds.

8 Speedy Turnaround We can usually have your loan ready to close in about 4 weeks. Rates can change and your mortgage payment could come due while you wait to learn whether you have qualified for the originally estimated funds. Our quick, efficient processing of your reverse mortgage could mean a difference of thousands of dollars to you. These materials are not from HUD or FHA and were not approved by HUD or a government agency. Access Reverse Mortgage Corporation is not in any way affiliated with HUD/FHA. The inclusion of various information, references, links, materials and logos are not an endorsement of Access Reverse Mortgage Corporation or any of its employees or business partners by HUD/FHA or any government agency.