HELPING YOUR CLIENTS USE THEIR HOME TO STAY AT HOME REVERSE MORTGAGES AND ESTATE PLANNING

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1 HELPING YOUR CLIENTS USE THEIR HOME TO STAY AT HOME REVERSE MORTGAGES AND ESTATE PLANNING Presented By Doni Dolfinger Reverse Mortgage Specialist

2 UNDERSTANDING REVERSE MORTGAGES Your client s home is many things, safety independence, and memories to name a few. Now, with a reverse mortgage, it can also be a source of money. A reverse mortgage can meet financial needs and insure that your clients may stay in their home as long as they choose.

3 REVERSE MORTGAGE DIFFERENCE A REVERSE MORTGAGE IS A LOAN AGAINST THE PRIMARY RESIDENCE THAT REQUIRES NO REPAYMENT UNTIL THE HOMEOWNER MOVES, SELLS, REFINANCES OR DIES. NO INCOME/MEDICAL/CREDIT REQUIREMENTS NO MONTHLY PAYMENTS TO THE LENDER NO PREPAYMENT PENALTY USE THE MONEY HOWEVER THE BORROWER(S) DESIRES (monthly income, medical expenses, home remodel, payoff bills, in home care, for example)

4 QUALIFYING FOR A REVERSE MORTGAGE ALL HOMEOWNERS MUST BE 62 OR OLDER EXISTING MORTGAGE PAID ATTEND FREE COUNSELING SESSION WITH HUD-APPROVED HOUSING COUNSELOR HOME MUST MEET FHA GUIDELINES (MOST CONDOMINIUMS ACCEPTABLE)

5 HOW MUCH WILL MY CLIENT QUALIFY FOR? DETERMINED BY: APPRAISED VALUE OF HOME OR MAXIMUM CLAIM AMOUNT (WHICHEVER IS LESS) BORROWER(S) AGE CURRENT INTEREST RATE

6 FHA REVERSE MORTGAGE VALUE/PAYMENT EXAMPLES MONTHLY ADJUSTABLE RATE PLAN AGE PROPERTY VALUE CASH VALUE * MO PAYMENT 65 $150,000 $68,227 $433 $200,000 $93,127 $592 $250,000 $118,027 $ $150,000 $85,181 $599 $200,000 $115,581 $812 $250,000 $145,981 $1, $150,000 $103,643 $926 $200,000 $139,893 $1,250 $250,000 $176,143 $1,574 * After calculation, and accounting for closing costs. These examples are based on a tenure payment plan with a monthly adjustable interest rate feature using an expected rate of 6.50%. All rates and costs are subject to change.

7 REVERSE MORTGAGE LOAN PAYMENT OPTIONS BORROWER(S) DESIGN THE PLAN TENURE OR TERM LINE OF CREDIT LUMP SUM COMBINATION OPTIONS CAN BE CHANGED AT ANY TIME FOR $20

8 REVERSE MORTGAGE FEES AN ITEMIZED ESTIMATE OF CLOSING COSTS WILL BE PROVIDED LOAN COSTS TO BORROWER(S) MAY BE FINANCED INTO THE LOAN. FHA MIP CHARGE OF 2% OF MAXIMUM CLAIM AMOUNT LOAN ORIGINATION FEE 2% NORMAL CLOSING COSTS

9 REVERSE MORTGAGE INTEREST CALCULATIONS INITIAL INTEREST RATE BASED ON THE ONE YEAR T-BILL PLUS MARGIN ANNUAL ADJUSTABLE MONTHLY ADJUSTABLE RATES ARE THE SAME ACROSS THE COUNTRY, ONE LENDER WILL NOT HAVE A BETTER RATE THAN ANOTHER.

10 REVERSE MORTGAGE AND LIVING TRUSTS TRUST MUST MEET FHA GUIDELINES MUST BE A REVOCABLE TRUST MUST BE VALID AND ENFORCEABLE IN THE STATE (COLORADO), ACKNOWLEDGED BY ATTORNEY IN OPINION LETTER LENDER WILL BE NOTIFIED OF ANY FUTURE CHANGES TO THE TRUST CONFIRMED WITH AMENDMENT

11 REVERSE MORTGAGE AND LIFE ESTATES LIFE ESTATES ARE USUALLY ACCEPTABLE IF ALL PARTIES NAMED ON THE LIFE ESTATE WILL OBTAIN COUNSELING AND SIGN CLOSING DOCUMENTS ACKNOWLEDGING THE TERMS OF THE LOAN AND THAT IT IS DUE AND PAYABLE WHEN BORROWER DIES. QUIT CLAIM OUT OF LIFE ESTATE

12 REVERSE MORTGAGES AND POWER OF ATTORNEYS POA SHOULD BE A DURABLE (UNLESS IT IS USED ONLY FOR SIGNING CLOSING DOCUMENTS) POA MUST BE ALLOWED TO ENCUMBER THE PROPERTY TITLE COMPANY TO REVIEW AND APPROVE POA DOCTOR LETTER MAY BE NECESSARY DEPENDING ON INCAPACITY OR INCOMPETENCY, CHECK WITH YOUR LENDER TO SEE WHAT THEY REQUIRE.

13 REVERSE MORTGAGE SECURITY FEATURES INSURED BY FHA HOUSE REPAYS DEBT MAY BE USED WITH SSI, OAP, MEDICAID AND OTHER NEED BASED PROGRAMS NON RECOURSE (GUARANTEED NO DEBT LEFT TO BORROWER OR ESTATE)

14 REVERSE MORTGAGE REQUIREMENTS KEEP PROPERTY TAXES CURRENT MAINTAIN HOMEOWNERS INSURANCE KEEP PROPERTY IN GOOD CONDITION LIVE IN THE HOME AS A PRIMARY RESIDENCE Borrower(s) Retain Ownership

15 REVERSE MORTGAGE BENEFITS LOAN CAN SATISFY A BROAD RANGE OF NEEDS : PROVIDE EXTRA DOLLARS TO ALLOW BORROWER(S) TO STAY IN THEIR HOME THROUGHOUT RETIREMENT HOMEOWNERS INSURANCE IN HOME HEALTH CARE LONG TERM CARE INSURANCE RENOVATE OR UPDATE HOME PROVIDE BORROWER(S) A MEANS TO LIVE MORE COMFORTABLY AND PURSUE THEIR DREAMS TRAVEL EXTRA SPENDING MONEY GIFTS TO CHILDREN/GRANDCHILDREN PURCHASE SECOND OR WINTER HOMES

16 FHA REVERSE MORTGAGE VALUE/PAYMENT EXAMPLES MONTHLY ADJUSTABLE ASSUMPTIONS Property Value $200,000 FHA Insurance Premium $4,000 Initial Note Rate 6.40% Monthly Servicing Fee $30-35 Est. Closing Cost $5,750 AGE 65 AGE 75 AGE 85 Cash Available $93,127 $115,581 $139,893 5 Years $1,833 $2,274 $2, Years $832 $1,032 $1,250 Tenure $592 $811 $1,250 Money available may be taken in several ways to meet clients needs $300 Monthly Tenure $45,895 In LOC $500 Monthly 15 Years $59,629 in LOC Needs $5,000/month for home care - She can get $5,066 for 30 months In 5 years the Line of Credit will grow to: $64,835 $84,238 No LOC

17 WHAT S LEFT FOR CLIENT OR ESTATE?? Assume the 75 year old finances the closing costs, takes $500 a month income, never touches the line of credit and decides to sell in six years: At 4% appreciation home is worth $253,064 Approximate loan balance 71,131 Net equity to borrower or heirs 181,933 Rate fluctuation will affect amount owed but will not affect monthly payments to the borrower.

18 REVERSE MORTGAGE BENEFITS NO MONTHLY PAYMENTS TAX-FREE FUNDS RECEIVE BENEFITS AS LONG AS BORROWER(S) REMAIN IN THEIR HOME RETAIN HOME OWNERSHIP

19 WHY CHOOSE UNIVERSAL LENDING CORPORATION? Universal Lending Corporation is a locally owned and operated mortgage company whose success has resonated over the last 25 years in Colorado. We are approved by FHA and Fannie Mae to offer their reverse mortgage products and are proud members of the Colorado Mortgage Lenders Association and the National Reverse Mortgage Lenders Association. Our team of reverse mortgage experts has a combined total of 65 years of experience, and has been involved with the product since its inception in We are committed to customer service and all files are handled locally saving time and increasing benefits to clients. The Reverse Mortgage staff members at Universal Lending Corporation are the leading experts in the industry and know how to help our customers achieve the lifestyle they desire. Doni Dolfinger is a seasoned mortgage professional that has worked in real estate and mortgage banking since Doni closed the first FHA- Insured Reverse Mortgage loan in Colorado in Working exclusively with reverse mortgage products for more that sixteen years, she has closed over 1,700 reverse mortgage loans. Recognized as an expert in her field she has been instrumental in helping educate our Realtors, Financial Planners, Lawyers, Mortgage Professionals and Colorado Seniors by offering seminars throughout our state.