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You’ve worked hard 

for your home

Now let YOUR HOME 

work for you!

A checklist to see if a Reverse Mortgage might make sense for you.

• Could you use extra cash or monthly tax-free income?
• Do you have quite a bit of equity in your home?
• Do you want to remain living in your home for as long as possible?
• Are there repairs or improvements you would like to make to your home?
• Are there extra things you would like to do for yourself and your loved ones?
• Do you need cash to pay monthly long term health care premiums?

Reverse Mortgages were introduced by the Federal Housing Administration (FHA) in 1987 and are designed for people 62 and older. It allows you to access the equity you have in your home without having to sell your home.

Unlike traditional mortgages and home equity loans, which require payments to a lender each month, a reverse mortgage loan actually pays you. Best of all reverse mortgages require no repayment of monies received, as long as you occupy your home as your primary residence.

The Home Equity Conversion Mortgage (HECM) is a reverse mortgage designed by the U. S. Department of Housing & Urban Development (HUD), and insured by the FHA to give older homeowners a vehicle for converting the equity in their homes to cash.

A reverse mortgage is easy to obtain. The requirements you must meet are:

• The home must be your primary residence.

• The youngest borrower must be at least 62 years of age or older.

• You are required to be counseled by a HUD approved representative, this is for your protection (family and friends are encouraged to be involved.)

• All liens currently against the property must be able to be satisfied.

and will it affect my other benefits?

Reverse Mortgage income is not taxable. The income from a Reverse Mortgage will not affect your Social Security or Medicare eligibility or benefits because these programs are not based on need.

If you receive Supplemental Security Income (SSI) or Medicaid benefits, both of which are based on need, these benefits may be affected. To determine if the Reverse Mortgage income would affect your situation, you must consult your local offices for SSI and Medicaid.

How much can I borrow?

The maximum amount you can borrow is 

determined by three factors:

• The current interest rate

• The age of the youngest borrower

• The maximum mortgage amount. This amount is the appraised value of the home or the maximum mortgage amount allowed for your area, based on the plan you select (whichever is lesser).

Your unused line of credit will grow every month at a rate determined by the FHA.

When the last borrower permanently leaves the property the loan becomes due. You will never owe more than the full value of the property.

• The Bank owns my house.

Not True. The homeowner retains title to the property, and can choose to sell the home at any time.

Not True. The Reverse Mortgage is a non-recourse loan, which means the bank can never come after any person or estate for repayment of the loan. The bank can only receive payment of the loan from the value of the home.

Not True. You may payoff a mortgage or equity loan with a Reverse Mortgage. In fact you may get a Reverse Mortgage to payoff the current mortgage to eliminate the monthly payment.

Not True. A Reverse Mortgage has no income or credit qualifications. The qualifications are that you be at least 62 years of age, the home is your primary residence and that the home has enough equity.

• The Reverse Mortgage requires that I make monthly payments.

Not True. There are never any monthly payments. Payment of taxes, insurance and general upkeep of the home are the only responsibilities of the homeowner.

• Only the "cash poor" or desperate senior citizens can benefit from the Reverse Mortgage.

Not True. Even though some seniors may have a greater need than others for the cash or monthly income, the Reverse Mortgage can also be an excellent financial or estate planning tool.

 

Reverse Mortgages as an

Estate Planning Tool

The Reverse Mortgage should be considered as an integral part of the estate plan. As a non-recourse loan that releases home equity and converts it into tax-free cash, there are no restrictions on the use of the proceeds, the borrower continues to own the home and no monthly payment is required for as long as the borrower resides in the home.

of Long-Term Care Insurance

Most Americans recognize the need for a long-term care insurance program to both protect their assets and relieve any potential burden on their family. Many Seniors, when faced with this situation are forced to use their savings or impact their monthly income for long-term car coverage. A reverse mortgage allows seniors to stay in their homes, be self-sufficient, and not deplete existing savings or income.

While a home may hold a great amount of emotional value for a family, the reality is that in most cases, the property is sold after the owner’s death. The heirs are often forced to sell the property in a volatile real estate market with no guarantees. After the sale, which may drag on due to market conditions, heirs may be faced with inheritance and/or capital gain taxes on the proceeds. The net proceeds are often less than the perceived value of the home. If a reverse mortgage is used to purchase life insurance, this scenario typically translates into greater wealth transfer to the heirs.

Provide Funding for Estate Taxes

When the tax-free equity release is used to fund life insurance products, a reverse mortgage is a creative and effective way to secure the future for heirs. It gives homeowners, particularly those with substantial wealth built up in their homes, the comfort of having more control over their estate and assuring the legacy they leave retains its value by:

Lowering the total estate value subject to taxes. Providing life insurance proceeds for the homeowner’s heirs to pay estate taxes.

Purchase a New Home 

with a Reverse Mortgage

When considering your financing options on your new home purchase, why should you use cash for the entire purchase?   A Reverse Mortgage is a very viable option and financial strategy.  Use only 50 or 60% of the purchase price from your cash, and allow a Reverse Mortgage for the balance of the purchase price.   As a very smart financial strategy, you can use the balance of your cash for other investment opportunities and Estate Planning.  With rising home costs of property taxes and homeowners property insurance, be prepared and plan to have extra cash on hand.

Choices for Receiving Payment

There are five payment options on the HECM loan from which you can choose. If your financial needs change, you can change your payment plan at any time after closing for a nominal fee. The options are:

Term --- You receive equal monthly payments for a fixed period of time, which you select.

Tenure --- You receive equal monthly payments for as long as you occupy the home as your principal residence.

Line of Credit --- You may draw a maximum amount of money at the times and in the amounts of your choosing.

Modified Term --- A portion of the loan proceeds are set aside as a line of credit. You receive the balance of money in equal monthly payments for a fixed period of time, which you select.

Modified Tenure --- A portion of the loan proceeds are set aside as a line of credit. You receive the balance of money in equal monthly payments for as long as you occupy the home as your principal residence.

 

    Alternate choices of  receiving payments in a Cash Account

 

• No Maximum value of home
• Open ended revolving line of credit
• Special 6 month introductory rate
• Unused portion of line of credit grows by 5 % per annum until maturity
• No pre-payment penalty

    1.    AWARENESS       

Homeowner learns about the reverse mortgage program from a news article, advertisement, word-of-mouth, etc.

2.  ACTION         

If necessary, homeowner seeks additional information by contacting the National Reverse Mortgage Lenders Association, AARP, or most conveniently --- CALL STU !

3.  COUNSELING             

Homeowner seeks counseling from a local HUD approved counseling agency or AARP-trained counselors. Counseling is mandatory regardless of which reverse mortgage product you choose. Counseling is usually conducted over the phone, and will include the senior(s), and if necessary or requested, their family member or advisor. The counselor provides supplemental information on reverse mortgages, confirms whether you’re eligible to get a reverse mortgage, and discusses other options that may be available to assist with your daily living. The homeowner will be given a certificate to give to us as proof they were counseled.  Counseling is another step in assuring the senior(s) that they are protected by HUD guidelines, and understand the entire reverse mortgage process.

4.   APPLICATION / DISCLOSURE     

Homeowner fills out the loan application and selects the payment plan: fixed monthly payments, lump sum payment, line of credit, or a combination of these. We will disclose to the homeowner the estimated total cost of the loan, as required by the Federal Truth in Lending Act. The homeowner provides us with required information, including photo ID, verification of Social Security number, copy of the deed to the home, information on any existing mortgage, and the counseling certificate.

5.    PROCESSING          

We order an appraisal of the property, title search and review, lien payoffs (if there are any), etc. The appraiser will assign a value to the home and determines the physical condition of the property. If the appraiser uncovers structural defects that require repair, the homeowner must hire a contractor to complete the repairs after the reverse mortgage closes.

6.  UNDERWRITING         

After receiving all pertinent information and data, we finalize the loan parameters with the homeowner (determining payment option, frequency of loan interest rate adjustments) and submits the loan package to our Underwriting Department for final approval. 

 

7.  CLOSING

If the loan package is approved, closing (signing the loan documents) is scheduled. Initial and expected interest rates are calculated. Closing papers and final figures are prepared. Closing costs are normally financed as part of the loan. The loan papers are then signed.

8.  DISBURSEMENT           

The Homeowner has 3 days after signing the loan papers in which to cancel the loan. Upon expiration of this period, the loan funds are disbursed. Homeowner accesses the funds in the form of the payment option selected. Any existing debt on the home is paid off. A new lien is placed on the home. The homeowner may use the loan proceeds for any purpose. During the life of the loan, the loan "servicer" disburses monthly payments to the homeowner (if this option is choosen), advances line of credit funds upon request, collects any repayments on the line of credit, and sends periodic statements.

The entire loan process from application to loan funding is approximately 3 - 4 weeks for a single family home, and 4 - 5 weeks for a condo.  Our turn-around time is one of the fastest in the Industry.

9.  REPAYMENT         

Homeowner doesn’t make any monthly  mortgage payments to the Lender during the life of the loan. The loan is repaid when the homeowner ceases to occupy the home as a principal residence. The loan may be repaid by the homeowner or the heirs/estate, with or without a sale of the home. The repayment obligation can’t exceed the home’s value or sales price.

 

Common Questions and Answers --- Summary

Yes. While your property must meet FHA minimum standards, it doesn’t matter if you didn’t buy it with an FHA-insured mortgage. Your new HUD Reverse Mortgage will be a new FHA-insured mortgage loan.

 

You can still qualify. An eligible property must by your principal residence, but can be a single-family residence; a one to four unit dwelling with one unit occupied by the borrower; a manufactured home (mobile home); a unit in an FHA-approved condominium; and Planned Unit Developments. Your property must meet FHA minimum property standards, but you can fund repairs from your Reverse Mortgage.

 

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income to qualify for the loan, and you are required to make monthly mortgage payments. A Reverse Mortgage works very differently. The Reverse Mortgage pays you, and it is available regardless of your current income. You don’t make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes and other conventional payments like utilities, but with an FHA-insured HUD Reverse Mortgage, you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

 

No! The loan does not become due until your home is sold, is no longer your primary residence, or until you die. You cannot be forced to sell your home to pay off the mortgage loan even if the loan balance grows to exceed the value of the property. HUD’s Federal Housing Administration guarantees that you’ll receive all the payments that are owed to you.

 

When you sell your home, or no longer use it for your primary residence, you or your estate will repay the cash you received from the Reverse Mortgage, plus accumulated interest and other finance charges to the lender. All proceeds beyond what you owe belong to you or your estate. This means that the remaining equity in your home can be passed on to your heirs. None of your other assets will be affected by HUD’s Reverse Mortgage loan. No debt will ever be passed along to the estate or heirs. You retain ownership of your home, and may sell or move at any time.

 

When is a Reverse Mortgage a Bad Idea?

1.    When the proceeds of your reverse mortgage are going to be "reinvested" by a financial planner. You would need to get a very high return on your investment to make this worthwhile. Putting the equity in you home at risk is never a sound idea, particularly since for many seniors, that equity is their only asset.

3.    When you get a reverse mortgage to help a relative start a new business. Assuming that your home is your only major asset, to risk it after retirement is a bad idea. Ask your relative to take out  a loan on his or her own. Even the most loving, honest and  hard-working relative can fail in business. Young people have years to recover financially. 

4.     When the house is in only one person’s name, but there are two people living in the house. The rules of the Reverse Mortgage are such that when the last owner of the property moves out for 12 months, or passes away, the Reverse mortgage has to be paid back. If the property is not in both spouses’ names, then the mortgage is due.

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How much of a Reverse Mortgage

Do You Qualify for ?

 

For more information and a FREE ANALYSIS

on our Reverse Mortgage programs,

Call Stu Naar NOW!!!!

561-995-2111 or 800-616-4008 toll free

Cell:  561-445-9905

Email: stun50@comcast.net 



 

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