REVERSE MORTGAGE FOR HOME PURCHASE

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1 Great Florida Lending Jose F. Lopez Lic. Loan Originator T REVERSE MORTGAGE FOR HOME PURCHASE New Business Building Opportunities for Realtors!

2 COURSE MISSION STATEMENT To Help Realtors Develop a Niche Market: The purpose of the Home Equity Conversion Mortgage (HECM) for Purchase course is to educate Realtors on a unique financial product that can be used to target one of the largest demographics in the real estate industry, Seniors. and their real estate needs. By marketing to the real estate needs of Seniors, particularly the Baby Boomer Generation, Realtors can focus on one of the wealthiest generations in American history.

3 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 ' Est. Endorsed Loans REVERSE MORTGAGE HISTORY 1987 FHA program began Fastest growing segment of the market HECM for Purchase program becomes effective Over 493,815 lives changed through the Reverse Mortgage process. 110, ,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

4 WHAT IS THE HOME EQUITY CONVERSION MORTGAGE (HECM) FOR PURCHASE? An FHA-insured Reverse Mortgage. Enables Senior homebuyers, age 62 or older, to purchase a new primary residence and obtain a reverse mortgage in simultaneous transactions with no monthly mortgage payments. Allows Senior buyers to combine reverse mortgage proceeds with a down payment from their current home sale or other assets, to purchase a new home.

5 HOW CAN THE HECM FOR PURCHASE BENEFIT REALTORS? Expand your customer base by telling prospective buyers about this program and its benefits. Allows Realtors to list the properties of potential customers looking to downsize or upgrade their current residence. Real estate agents may benefit from two potential transactions a home sale and purchase.

6 Applicants have to be 62 years or older. Only 62+ year old Seniors can be on title. United States Citizen or Permanent Resident with Alien Card. -No Income -No Assets -No Minimum Credit Score -No Problem!

7 WHO ARE THE CANDIDATES FOR A REVERSE PURCHASE? Very flexible income and qualification Requirements: Senior Buyers that don t qualify for conventional or FHA financing. Funds required can all be gifted by multiple sources. Useful tool for senior borrowers wanting to relocate and downsize. (Empty Nesters) Never have a mortgage payment after closing.

8 WHAT TYPE OF HOMES ARE ELIGIBLE FOR REVERSE PURCHASE? Single family homes (attached or detached) Duplex, Triplex, & Fourplex. Condos & Townhouses (FHA approved) No co-ops, nor new construction where the certificate of occupancy has not been issued.

9 BENEFITS OF A REVERSE MORTGAGE No monthly payments, ever. Does not affect Social Security or Medicare benefits. Senior holds title to the property bought just like a regular purchase. Senior keeps all remaining equity when property is sold.

10 ONE: IDENTIFY THE NEED. Robert & Samantha Jones, both 74, want to buy a more accommodating single-story home. They work with a real estate agent, you, to sell their current two-story home priced at $450,000. In separate second transaction, they look into buying a new single-story home. The Jones meet with you and look at several homes priced at $300,000.

11 TWO: APPLY FOR THE LOAN. You introduce the Jones to a reverse mortgage consultant (Licensed Loan Originator). The HECM for Purchase consultant shows the Jones how the reverse mortgage for purchase could provide the additional funds they ll need: Purchase Price $300,000 Reverse Mortgage Proceeds $197,700 Cash Required To Close $102,300

12 THREE: CLOSE TWO TRANSACTIONS. The Jones combine the $102,300 from the sale of their departure home with the $197,700 reverse mortgage to purchase a new home for $300,000 and have no monthly mortgage payments! You handled two real estate transactions for the Jones.

13 THE REVERSE MORTGAGE PROCESS. HUD COUNSELING & APPLICATION Before submitting your buyer s loan application they must complete HUD required counseling. (Counseling is typically a 30 minute phone consultation) Borrower fills out and signs 1009 Application. APPRAISAL The appraisal is scheduled immediately after counseling certificate is obtained. CLOSING Your Senior Buyer Closes within days after appraisal & owns their new home.

14 POTENTIAL HECM PURCHASE SCENARIOS. SAMPLE SCENARIO ONE: Purchase Price: $625, Down Payment: $235, (38%) HECM Loan Amount: $389, SAMPLE SCENARIO TWO: Purchase Price: $200, Down Payment: $ 82, (41%) HECM Loan Amount: $117,500.00

15 BENEFITS OF A REVERSE MORTGAGE You will never owe more than the home value. No credit, income or asset qualifications. Repay at any time with no prepayment penalty. No upfront fees collected. Government insured FHA.

16 HECM PURCHASE MYTHS I would be buying my house but the bank will own my home: FALSE---You keep the title to your house. My heirs won't inherit anything: FALSE---Your estate only owes the balance on the reverse mortgage. I could get forced out of my home: FALSE---FHA/HUD reverse mortgages specifically state that you can not be forced out of your home.

17 HECM PURCHASE MYTHS Social Security and Medicare will be affected: FALSE---Money from a reverse mortgage is not considered income and doesn t lower Social Security or Medicare Benefits. There are big out-of-pocket expenses: FALSE---All of the costs, whether closing costs or interest, are financed.

18 IMPROVE YOUR CUSTOMERS LIFE. A HECM for Purchase allows the Senior Borrower to qualify for a loan. A HECM for Purchase has no Monthly mortgage payments. Make life easier and worry free for your senior buyers. Home Equity No Payments Better Life

19 5 REASONS TO GET A REVERSE PURCHASE Buyer owns their home for life Not the bank. Buyer never makes a mortgage payment as long as they maintain their home as their homestead. Buyer s heirs still inherit the home. Buyer and heirs never owes more then their home is worth.

20 REPAYMENT OPTIONS / OBLIGATIONS When the buyer/borrower sells their home. When senior leaves the home for more than 12 consecutive months for medical reasons. After the passing of the last homeowner. Senior can Repay or refinance at anytime during the loan (No Pre-payment Penalty). If Senior doesn t pay their homeowner s insurance (replacement coverage) and/or property taxes.

21 OBLIGATIONS DURING THE LOAN Maintain the home as primary residence. Keep the home in good condition. Maintain paying homeowner s insurance and property taxes. Continue to use the Property for its intended zoned use.

22 Great Florida Lending Jose F. Lopez Lic. Loan Originator T REVERSE MORTGAGE FOR HOME PURCHASE New Business Building Opportunities for Realtors!