BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A An ebook Presented by: L.E. Stevenson Founder: College of Mortgage Knowledge V1.6
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A An ebook Presented by: L.E. Stevenson College of Mortgage Knowledge About the Author: Larry Stevenson has over 35+ years of real estate lending experience. His background includes retail, wholesale, and correspondent mortgage lending and management. He also has 25+ years as a licensed, practicing real estate broker. In addition to his corporate management career he has been the principal in an industry trade school, The Mortgage Training Institute as well as owner and founder of the College of Mortgage Knowledge where he conducted training seminars and sales curriculum for retail mortgage loan officers. He s been an officer in a commercial bank as well as an owner of his own retail mortgage brokerage and real estate acquisition company. His background includes several years as an instructor for the University of Colorado s Extension School teaching Real Estate Finance for continuing education credit to industry professionals. Recognizing that seniors today are being serviced by a wide and varied reverse mortgage industry he sees seniors being taken advantage of by a few unscrupulous and mercenary lenders. As such, he s dedicated his communication skills to providing a source of information without all the commercial hype or solicitation. His prime interest today is to provide the public with a no cost, no risk, FREE source for the best information on Home Equity Conversion Mortgages also known as s. Published by: BestReverseLoanInfo.com Research Department Copyright 2015 by Options Marketing, LLC All Right Reserved. No part of the book may be reproduced, scanned, copied or distributed in printed or electronic form without permission. Illustrations by: John Caldwell, Licensed by: Delrina Corporation V1.6
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal on a Table of Contents Chapter 1...............................What is a? Chapter 2........................................What are The Risks? Chapter 3.....................................What are the Benefits? Chapter 4...............What is the Process to Obtain a? Chapter 5.................................. Which Lender Should I Use? Chapter 6.................................. How To Compare Lenders? Chapter 7.............................. How Much Is My House Worth? Chapter 8.............................. How To Negotiate With A Lender Chapter 9.............How To Purchase A Home With A? Chapter 10....................... How Does Mandatory Counseling Work? Chapter 11............................ Payout Options Chapter 12...................................... Line-of-Credit Growth Chapter 13.......................................Mortgage Insurance Chapter 14........... The Non-Recourse Feature of FHA s Chapter 15 Chapter 16.................................... Borrower Qualifications................................... Questions and Answers
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter -1 - What Is a? And How Does It Work? V1.6
What Is a? And How Does It Work? What It Is: Home Equity Conversion Mortgages or HECMs are also known as s. A reverse mortgage is a unique loan that allows homeowners, 62 years of age and older, to draw on the equity in their home. The homeowners have a variety of payout options. One aspect of this loan is that it does not require monthly payments. Also repayment is not required until the homeowner no longer resides in the residence or does not comply with the loan program obligations such as paying property taxes and insurance, and maintaining the property to FHA standards. What It Is Not: A reverse mortgage is not a FREE loan. A reverse mortgage is different from all other types of mortgage loans in respect to it s payment structure and term but it is like all other mortgage loans in that it represents a debt secured by the ownership and equity in your home. Depending on the amount of equity versus the appraised value of your home a reverse mortgage offers a means to access this equity without the necessity of making any monthly payments. This is regardless of fluctuating property values, and borrower s life span. How Does It Work? Like any other mortgage loan, you are borrowing against the value of your home while you maintain all the rights and privileges you now enjoy. The difference between a traditional forward mortgage and a reverse mortgage is that no monthly payments are due on a reverse mortgage and the borrower can select to draw additional equity from their home and increase their loan as they choose under certain restrictions. Also, the borrowers can live in their home for as long as they choose. Who Does What? The lender is required to disclose all terms and fees for the loan at time of application. The U.S. Department of Housing and Urban Development (HUD) requires all reverse mortgage applicants to complete an approved third party counseling course prior to applying for a reverse mortgage. Loan origination fees are regulated by HUD. Other costs and interest rates vary depending on what type of reverse mortgage is selected and which lender is used.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 2 - What Are The Risks Of Taking Out a On Our Home? V1.6
What Are The Risks Of Taking Out a On Our Home? What Are The Risks? Like any other mortgage, the reverse loan represents a lien against your home. The borrowers have certain obligations to meet even though there are no payments due. There are no prepayment penalties. The borrowers can payoff their reverse mortgage at any time without any penalty. It is a nonrecourse loan. That is, the borrowers can never owe more on their home than what the house is worth based upon the appraisal used to evaluate the loan application. Nor do their heirs have any financial obligation to repay the debt. The heirs can however, inherit the house, payoff the reverse mortgage and own or dispose of the home as they choose. The Obligation The borrowers must pay all taxes when due and keep appropriate home owners insurance in force during the entire life of the reverse mortgage. The home must also be maintained in good repair at all times. All borrowers can remain in the home for as long as they choose as long as they maintain their home as their primary residence and fulfill the financial obligations of the taxes, insurance and maintenance. It s not an Error to Use Your Home Equity To Financially Improve Your Retirement
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 3 - What Are The Benefits of A Loan? V1.6
What Are The Benefits of A Loan? Benefits In one sentence, the benefit of a reverse mortgage loan is: Money to spend without a monthly payment. Borrowers with a traditional mortgage living on fixed retirements incomes find that being able to live in their home with NO MONTHLY PAYMENT is relief from a major financial burden. Borrowers can keep their homes without having to downsize for economic reasons and not be faced with a large mortgage payment each month. In some cases where sufficient equity is present, reverse mortgage borrowers can also draw additional equity from their home as they choose, i.e. when needed, regular monthly withdrawals, or annual payments etc. Many seniors with a reverse mortgage feel like celebrating their new found financial freedom. Are There Restrictions On How I Can Use The Money? There are no restrictions to how you can use the money you receive from a reverse mortgage. Previous borrowers have used it for living expenses, vacations and medical bills. It is completely up to you on how the money gets spent because it is your equity and your money. There are several ways to receive the funds from a reverse mortgage. You can take a lump sum at closing, you can take periodic or regular withdrawals as often as you choose or you can save your available credit and take it at a later date. It s the borrower s choice when they draw against their available equity. How much can you get? This is a complicated calculation that only a professional loan officer from a legitimate lender can provide.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 4 - What Is The Process of Getting A Loan Or Who Does What? V1.6
What Is The Process of Getting A Loan Or Who Does What? The Process Remember, the process of obtaining a reverse mortgage is different than a traditional forward mortgage. To qualify, one of the borrowers must be at least 62 years of age, own a home with sufficient equity that meets FHA minimum property standards, have hazard insurance approved by the lender and meet the loan qualifications for income and credit. The borrower s ages, amount of equity based upon a current FHA appraisal and existing liens on the property which are to be paid off determine the available loan amount on a. Borrowers must also undergo third party counseling prior to applying for a reverse mortgage. As there are no monthly payments the financial qualifications are far more lenient than a traditional mortgage. However, borrowers must still prove to a lender they have the financial wherewithal based upon their family budget and the intent to pay the property insurance and taxes when due based upon their credit history. The Process Looks Something Like This: Initial Inquiry, Fact Finding Loan Processing, Loan Approval, Loan Closing Loan Funding 3rd Party Counseling Completed Loan Application, Appraisal Like all mortgages, the process is not as complicated as it is involved. There are many pieces to a loan application before it can be approved. It takes a while to get from initial interest in a loan to funded loan. Talk to your loan officer to make sure your expectations are consistent with the lender s ability to perform.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 5 - Which Lender Should I Use? V1.6
Which Lender Should I Use? Not All Lenders Are The Same There are many choices on which lender to use. The U.S. Department of Housing and Urban Development, (HUD), regulates all lenders and sets limits on the amount of the Loan Origination Fee. Other Reverse Mortgage costs and fees vary among lenders and the different types of s available. The lender you choose should be a lender you can place your trust in. The different types of lenders vary from geographic market area and regions of the country. All HUD approved lenders must meet certain financial criteria to obtain HUD approval. Only nationally chartered banks and their subsidiaries are supervised by HUD AND the Federal Deposit Insurance Corporation, (FDIC) to ensure they are financially solvent, have the financial resources to back up their loans and are regulated on how they handle customer transactions. Mortgage Bankers, Mortgage Brokers and other type lenders are not subject to this review of their operating procedures or their financial condition. Many reverse mortgage lenders are high volume call centers geared for high loan volume. They usually have a frequently repeated TV advertising campaign in full swing to drive interest in their web page often using Hollywood personalities or spokespersons to add recognition and branding to their operations. Once a prospect inquires with one of these type lenders they will typically be inundated with incessant phone calls, emails, snail mail flyers and letters for weeks. The call center loan originators most times only know the script they are reading from when you call them. Choose carefully who you inquire with so you are not subject to this type sales activity.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 6 - Compare Lenders and Their Numbers Before You Commit V1.6
Compare Before You Commit Know Who To Trust If you respond to one of the many print, TV or internet ads you are going to more than likely be inundated with high pressure sales tactics from call center lenders. The large lenders in the Reverse Mortgage business are pretty much in the business solely for the money as represented on how much money they spend to advertise. Not that making money is bad, it s just many of the large lenders do not have a long history or a long term commitment to customer service. You need to be aware that when you close on a mortgage loan, after the rescission period, you are locked into that loan until it is paid. To pay off the loan you need to return all the money you borrowed plus interest. As most mortgage loans are for large amounts the usual manner to do this is to sell your home and use the proceeds to retire the debt. So before you make such a large, long term commitment make certain you have all the information you need to make an informed decision based upon what is best for you and your situation. A well practiced and trained call center commissioned sales person or a famous Hollywood actor may not be the best source for unbiased financial advise. Get the information you need to factually compare lenders before you commit to doing business with them. How To Choose a Lender There are many factors to consider: 1.) How long has the lender been in business is a strong indicator of how long you might expect them to be around after you close. 2.) What type of lender are they? Commercial Bank, Credit Union, Savings Bank, Mortgage Banker, or Mortgage Broker. Banks and Credit Unions value a long term relationship with customers. Most other lender don t. 3.) What are the rates and fees a lender is charging and what services do they provide? Compare the Financial Disclosures and Good Faith Estimates provided by all lenders. Get advise from someone you know and trust to help you if you don t understand. The high volume, heavy advertising lenders typically have the highest costs and therefore the least competitive rates and fees. Compare BEFORE you decide.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 7 - How Much Is My House Worth? V1.6
How Much Is My House Worth? Do I need a FHA Appraisal? All lenders require a professional valuation of your home. This is performed by an FHA approved appraiser who has the training and expertise to professionally determine the current value of your home. The primary method an appraiser uses is to find homes in your neighborhood that have sold recently that are similar in size, description and location to your own. They then make adjustments in the sales price, up or down, to make the sold comparable as similar in size, features and amenities to your home as possible. How do you obtain a FHA appraisal? Your lender will take care of obtaining the appraisal. The lenders have a special relationship with many FHA appraisers in your area and perform ordering an appraisal in the due course of processing your application. BEWARE. Although the lender orders the appraisal, typically, the borrower pays for the appraisal in advance of closing. In that, if the appraisal comes in below the number required to obtain loan approval the lender is not out any money for an appraisal on a loan that will not close. The borrower paid upfront for the appraisal they can t use. How do you avoid wasting money on an appraisal that is too low? Do your own research. Find Out What Your Home Is Worth? The best method to use to avoid paying for an FHA appraisal that comes in too low to make your loan work is for you, the borrower to do some research. A quick Google search of: What is my house worth? will result in more web sites than you can ever use to help you put a realistic market value on your home. The best method is to ask your professional loan officer. Any competent and experienced loan officer should be able to help you with your value or provide you with sources for property values in your area. The really good Loan Officers can send you a list of comparables and a value estimate in short order. Remember, only what the FHA appraiser comes up with on the official appraisal is going to matter. No matter what you find in your research, you are still at risk for the appraisal fee.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 8 - How To Negotiate With A Lender V1.6
How To Negotiate With a Lender What s Negotiable? Like all mortgage loans, to obtain a reverse mortgage there are many costs and fees. Not all lenders price loans the same. Most are pretty close but some are not. But first don t confuse price with value. If you so beat down a lender s price that there is little motivation left for the lender to do their best job for you, who comes out ahead? You don t want to overpay a lender but you certainly don t want to negotiate away all their financial incentives to assist you. Educate yourself on the different types of reverse mortgages that are available then select the loan that best fits your needs. Each type of reverse mortgage fits a certain need or overcomes a certain sensitivity to risk. The three types of HECM or FHA s available are: Annual Adjustable Rate LIBOR, HYBRID Annual Adjustable, Fixed Rate. What to Compare Between Lenders Most lenders will provide a borrower with a Loan Comparison. This disclosure will provide a borrower with all the pertinent figures and terms for a reverse mortgage loan. The lender is required by the Federal Truth In Lending Act to provide a Good Faith Estimate once the loan application is taken by the lender. The Good Faith Estimate discloses all the closing costs and fees associated with a reverse mortgage. The figures should be pretty close to what a borrower will see at final settlement, i.e. closing. Loan Officers at banks and at mortgage bankers (those lenders who loan their own money) typically will discuss your pricing options and lead you to your best deal. Call center loan brokers are less likely to negotiate as their primary interest is in making as much on each loan that they can which improves their personal compensation. Adjustable rate loans are subject to rate increases which could increase the cost of your reverse mortgage over time. The fixed rate loan locks in the interest rate. The Adjustable loans come with a line of credit if sufficient equity is available. The fixed rate loans are fully disbursed at the initial closing/funding so no further disbursements or draws are available.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 9 - How To Purchase A Home With a V1.6
Purchase Money What is the Purchase Money Program? The reverse mortgage purchase program was designed to allow seniors to purchase a new principal residence and obtain a reverse mortgage within a single transaction. The program was also designed to enable senior homeowners to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs, i.e., handrails, one level properties, ramps, wider doorways, etc What Property Types Are Eligible? Existing one to four unit properties where construction has been completed and the property is habitable as evidenced by local jurisdiction issuance of Certificate of Occupancy or its equivalent. Are Homes Under Construction Eligible? The lender may only take application once the Certificate of Occupancy or its equivalent has been issued. Lenders may only take a loan application for a reverse mortgage once a Certificate of Occupancy has been issued. Is the Amendatory Clause required? Yes. An appraisal is required for all HEM transactions, including purchase transactions. The execution of the Amendatory Clause does not negate federal and state mandates on providing a copy of the appraisal to the consumer. Seller Concessions No Seller, Lender, or Realtor sales concessions of any kind are allowed on reverse mortgages. Can Prospective Buyers Use Other Financing for Down Payment or Closing Costs? No. bridge loans and other interim financing methods associated with HEM transactions are prohibited, unless the unpaid or outstanding obligation can be satisfied prior to or on the day of closing. Are Set Asides For Repairs Allowed? To be eligible for federal mortgage insurance, the property must meet FHA Minimum Property Standards. All repairs to correct major property deficiencies that threaten the health and safety of the homeowner and/or jeopardize the soundness and security of the property must be completed by the seller prior to closing. Appraisers must complete the appraisal report as "Subject To" the completion of these repairs and perform a final inspection to ensure completion.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 10 - How Does Mandatory Counseling Work? V1.6
How Mandatory Counseling Works HEM Counseling The Federal Housing Administration requires that homeowners, and if applicable, non borrower spouse, that are interested in a Home Equity Conversion Mortgage (reverse mortgage) receive information about the implications of and alternatives to a reverse mortgage. The counselor must cover financial options other than a reverse mortgage available to the homeowner including other housing alternatives, social services available, other health and financial options. Additional home equity conversion options that are available to the homeowner such as other reverse mortgages, HEM for Purchase, HEM Saver and sale leaseback financing, deferred payment loans and property tax deferral programs need to be covered in the counseling. Government Mandated The government mandates that every person who wants to get a reverse mortgage has to participate in a counseling session with an independent, specially trained counselor for reverse mortgages. Aspects of a reverse mortgage, (Home Equity Conversion Mortgage) including an amortization schedule, a total annual loan cost and a loan comparison should all be covered in the counseling session. The HEM will be due and payable when no remaining borrower or nonborrowing spouse lives in the mortgaged property, or when any other covenants of the mortgage have been violated, such as lapse of the property insurance or non payment of property taxes when due.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 11 - Payout Options V1.6
Payout Options FIXED RATE LOANS Fixed Rate reverse mortgages only allow a LUMP SUM distribution of the full NET PRINCIPAL LIMIT at the time the loan funds. This is a closed end loan, so prepayment does not offer you the ability to draw funds again. LIBOR ARMs One benefits of the variable rate reverse mortgage is its flexibility. If your needs change after funding, you can alter your payout to other payout options, sometimes for a fee. The most popular option is LINE OF CREDIT (LOC). You can request money from your LOC as many times as you want, up to your current available limit.* If you would rather have an automatic monthly draw, the TENURED payment would be a good option. You will receive a monthly payment as long as one or more borrowers remain in the home and abide by program guidelines and sufficient equity is still available. If a monthly amount is not sufficient, you can opt for a TERM Payment where monthly payments are sent for only a defined period of time that meets your needs. The LIBOR ARM can also be customized to allow both a line of credit AND a monthly payment. These loan programs are called: Modified Tenure and Modified Term payout options. * Available funds may be restricted for the first 12 months of the loan
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 12 - Line-of-Credit Growth V1.6
LINE OF CREDIT (LOC) GROWTH Line of Credit To access the Line of Credit (LOC) a borrower can simply send in a request to the servicing department of their lender and have funds WIRED from the LOC into the borrower s existing banking account, typically within 5 business days. The 3 Primary Benefits of the LOC are: 1. The LOC only accrues interest on funds that have borrowed 2. The available LOC will grow over time 3. The borrower can repay a portion and draw on it again later The Growth Rate Yes! The LOC grows. However, it is only the AVAILABLE LOC that grows. Therefore, a client that borrows every penny from the LOC will not see an increase in the following month. Also, this growth is NOT INTEREST! The borrower is not earning anything. It is simply a GREATER CAPACITY TO BORROW IN THE FUTURE. The growth rate changes monthly based upon an index plus a margin typically using the 1 Month LIBOR Index. So, to calculate it you can use the following formula: LIBOR INDEX + THE MARGIN + 1.250% = GROWTH RATE Example:.200% + 2.750% + 1.250% = 4.200% Since LOC s compound MONTHLY that means that every month the LOC will grow by 1/12 of that estimated amount and be added to the new total.* Keep in mind, rates do change monthly. But using this example if you currently have a line of credit of $100,000 you would expect to have over $104,000 available at the end of 1 year. * Additional funds from LOC growth may be restricted for the first 12 months of the loan.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 13 - Mortgage Insurance V1.6
What are Mortgage Insurance Premiums? Nearly all s are insured by the Federal Housing Administration (FHA). As a result, Mortgage Insurance Premiums (MIP) are required to be collected and paid to the Department of Housing and Urban Development (HUD). Most borrowers will finance the MIP as part of their reverse mortgage if possible; (less cash out of pocket). Reverse mortgages loans require two types of Mortgage Insurance, Initial and Annual MIP: INITIAL MIP An up front premium added as a closing cost: 2.50% of the MCA For High Principal Limit Usage Annual MIP: 0.50% of the MCA For Low Principal Limit Usage Principal Limit Usage is the amount borrowed during the initial disbursement period. Loans that exceed 60% of the Principal Limit will be charged 2.50%. Loans equal to, or below 60% of the Principal Limit will be charged 0.50%. Mortgage insurance on traditional or FORWARD loans reimburses the lender in cases where the borrower defaults. On Reverse Mortgages, there are multiple positive impacts to the borrower from the MIP. Here are some examples: MIP allows this loan program to operate without required monthly principal and interest mortgage payments MIP assures the borrower will not owe more than the home is worth at the time the home is sold MIP allows the borrower and their heirs to use the home itself to pay for the mortgage debt MIP ensures borrowers will receive expected loan advances throughout the life of the loan in cases where the lender is unable Additionally, an ANNUAL MIP Accrues as a monthly premium at 1.25% of the Unpaid Principal Balance. *Listed on monthly statements as MIP Payment *Monthly Accrual = 1/12th of the annual rate (0.104% of the loan balance)
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 14 - Non-Recourse Feature Of FHA Insured s V1.6
The Non-Recourse Feature of s What is the Non Recourse Feature of a Loan? The short answer is: THE HOME STANDS ALONE FOR THE DEBT. The non recourse feature guarantees that the borrower and their heirs will never owe more than the value of the home at the time it is sold. Simply put, there is NO RECOURSE for any deficiency to the owners or heirs other than the home itself. This should ease the minds of borrowers, knowing they (and their heirs) are protected if they live a very long time or if the home declines in value over their remaining life. FHA has eliminated the downside risk of homeownership with a reverse mortgage, (HECM). Stated differently, Non Recourse means the borrower will never owe more than the loan balance or the value of the property, whichever is less; and no assets other than the home must be used to repay the debt. Because this sounds too good to be true, reference the following documents: HUD.GOV HEM Servicing Frequently Asked Questions (FAQs) When a HEM loan becomes due and payable as a result of the mortgagor s death and the property is conveyed by will or operation of law to the mortgagor s estate or heirs, that party may satisfy the HEM debt by paying the lesser of the mortgage balance or 95% of the current appraised value of the property. HUD s Handbook 4235.1 REV 1, Home Equity Conversion Mortgages, Paragraph 1 3C: The HEM is a non recourse loan. This means that the HEM borrower (or his or her estate) will never owe more than the loan balance or value of the property, whichever is less; and no assets other than the home must be used to repay the debt. The borrower and their heirs will never owe more than the value of the home at the time it is sold.
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 15 - Borrower Qualifications V1.6
s Qualifications What is the New Financial Assessment? This financial assessment process was implemented by HUD to make the Revere Mortgage, (Home Equity Conversion Mortgage (HEM) an even safer loan product and to protect senior Americans who are interested in reverse mortgages. In essence, the new changes will require lenders to conduct a financial assessment to evaluate reverse mortgage borrowers more thoroughly and to provide at risk borrowers with the means to meet their loan obligations. Effective for all application issued on or after April 27th 2015, lenders will evaluate borrowers on the answers to questions such as the following: Is the borrower capable of meeting financial obligations of the Reverse Mortgage? Is the borrower willing to comply with the reverse mortgage requirements? Is the borrower getting a reverse mortgage as a solution to financial difficulties that they may have, as reflected in their credit report and property charge payment history? If so, to what extent could the reverse mortgage actually provide a solution to any of those financial difficulties? What Is The Life Expectancy Set Aside? If it is found that the borrower has not demonstrated willingness or ability to meet financial obligations, then the lender must require a Life Expectancy Set Aside. These funds will be allocated specifically to paying the borrower s loan obligations throughout the life of the loan. In addition, mortgagees will as well, require certain additional documents. This documentation includes the following: Credit history documentation Income verification Asset verification Property charge verification Residual Income Analysis Documentation of extenuating circumstances or compensating factors Calculations for life expectancy set asides Residual Income shortfall set asides
BestReverseLoanInfo.com Senior s Guide On How To Get The Best Deal On A Chapter - 16 - Questions and Answers V1.6
Questions and Answers What Happens If I Outlive The Loan? Will I Have To Repay The Lender? No. As long as one of the borrowers obligated on the loan lives in the home, continues to pay the taxes and insurance and maintains the home in good condition, you will not need to repay the loan. Once the last surviving borrower passes away, the home is sold or if the obligations of the loan are not met, the loan must be repaid. Must My House Be Paid Off For Me To Qualify For A? No. You do not need to pay off your home to qualify. However, the loan proceeds you receive from a reverse mortgage must be used to pay off the existing mortgage or liens (if there is a mortgage balance owing). You will continue to hold title to your home. Is My Home Eligible For A? Homes eligible for a reverse mortgage include single family homes, detached homes, townhouses, and two to four unit properties that are owner occupied. Condominiums must be FHA approved. Some manufactured homes are eligible but must meet FHA guidelines. Contact a lender s loan officer for more details on manufactured home eligibility.
More Questions and Answers Do I Have To Pay Taxes On The Cash Payments I Receive? The cash or proceeds you receive from a reverse mortgage typically are not subject to individual income taxation. But, since you hold the title to your home, you are still responsible for property taxes, insurance, utilities, maintenance, and other home related expenses. Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole. We suggest you consult with your tax advisor to provide guidance for your individual situation. How Will This Loan Affect My Estate And How Much Will Be Left To My Heirs? Once the last surviving borrower dies, sells their home, or no longer resides there as the primary residence, the estate is responsible for repayment of the money you received from the reverse mortgage, plus interest and other fees. Any remaining equity belongs to either the owner or their heirs. The non recourse clause can prevent either the borrower or their estate from owing more than the value of your home when the loan is repaid.
More Questions and Answers Should I Use An Estate Planning Service To Find A? HUD advises against using any service that charges a fee, especially any service that requests a lender referral fee to obtain a reverse mortgage. HUD provides this information free of charge and can direct you to HUD approved housing agencies that offer approved reverse mortgage counseling or additional services that are free or have a minimal cost. You can find a HUD approved housing counseling agency near you by calling 1 800 569 4287 toll free. How Do I Receive My Payments? Reverse mortgage payments can be received from the lender in one of five ways: Tenure: equal monthly payments Term: equal monthly payments for a fixed period of months as decided by the borrower Line of Credit: payments made in installments or at various times and in amounts dictated by the borrowers. Modified Tenure: monthly payments with a line of credit Modified Term: monthly payments for a fixed period of months with a line of credit What Are The Closing Costs On A? The FHA upfront mortgage insurance fee, lender origination fee, title insurance. The appraisal and third party counseling cost are typically paid by the borrower prior to closing.
More Questions and Answers What Are The Differences Between A Home Equity Loan And A? Reverse mortgages have become more popular with seniors because they allow the borrower to receive loan proceeds that do not require repayment as long as you remain in your home as your primary residence and follow the loan guidelines. On the other hand, obtaining a home equity loan (or home equity line of credit or second mortgage) requires that you have sufficient income to cover the debt plus, you must continue to make monthly principal and interest mortgage payments. With a reverse mortgage you do not make monthly principal and interest payments. Keep in mind you must continue to pay all property related fees, taxes and homeowner's insurance and maintain the property in good condition. How Much Cash Can I Expect To Get? The cash you can potentially receive is calculated on the age of the borrowers, the current expected interest rate, the type mortgage option selected, amount of home equity and the appraised value of the home. For instance an older individual with a higher home equity typically will be eligible for more than a younger person with the same home value at the same expected interest rate. How much money you can take in the first year is limited. For more information on distribution limits can be provided by a qualified lender.
More Questions and Answers What If I Have A Mortgage On My Home Already? You can still use a reverse mortgage to pay off the current mortgage on your home. In fact many seniors do this so they no longer have a monthly mortgage payment on their home. Does A Affect My Government Benefits? Yes and No. A reverse mortgage will not affect social security income, Medicare or pensions. But it could affect Medicaid and Supplemental Social Security Income, (disability). Whose Name Is On The Title Of The Home? The borrowers remain the only ones on the title of the home and the lender does not have any ownership interest in the home. The lender s interest is limited to that of a secured party, or lien holder on the title. As with any other type mortgage. What Figures Do I Need To Know BEFORE I Close On A? The type of effects the closing costs and fees on a loan. Closing costs are a very important part of any loan transaction. There are three basic loan options for a. Fixed Rate where the interest rate is fixed for the term of the loan, Annual LIBOR Adjustable Rate where the interest rate adjusts up or down annually based upon an index, and the Monthly Adjustable where the rate adjusts monthly. The FHA mortgage insurance premium is dependant upon the amount of equity borrowed, and the type of loan. Other closing costs are related to the title insurance, signing fees and other incidental costs.
More Information Request To see the total costs of borrowing a on your home you will need to review a full Financial Proposal from an approved lender. This information will include all the loan terms to include interest rates, margins on Adjustable Rate loans, the ongoing mortgage insurance rates, the interest rate caps and the initial line of credit growth rate. Using your estimate on your home s value the full financial proposal will also include calculations on the maximum home value or claim amount, the principal limit, the mortgage insurance initial premium, the maximum cash available and the initial loan balance. Please let us know if you would like to see a full financial proposal and we can introduce you to a reputable Bank Loan Oofficers in the country. There is no obligation or consideration accepted for this referral. For a FREE, NO OBLIGATION financial proposal of how a would fit into your retirement plans simply provide your contact information below and email it to: Info@BestReverseLoanInfo.com Name: Address: City: State: Zip: House Market Value: $ Borrower(s) Ages: Existing Mortgage Balance: $ Phone Number: Opt In: We understand that in order to receive a full and accurate financial proposal, based upon the information we provide, it is necessary to speak with a loan officer. We further understand that we will not be harassed, overwhelmed or pressured in any way to make a decision about a Reverse Mortgage until such time as we choose. Initial Initial Disclaimer A reverse mortgage is a loan that must be repaid when the home is no longer the primary residence, is sold, or if the property taxes or insurance are not paid. This loan is not a government benefit. Borrower(s) must be 62 or older. The home must be maintained to meet FHA Standards, and you must continue to pay property taxes, insurance and property related fees or you will lose your home.