How Your Home's Equity Can Enhance Your Lifestyle and Provide Financial Security

 

Reverse Mortgage

• You will retain title to your home
• You will never be required to make a monthly mortgage payment as long as you occupy your home as your primary residence.
• No prepayment penalties. Although the loan is not due and payable until you permanently move out of the home, it can be paid off at any point without any additional fees or costs.
• Neither you nor your spouse can ever be required to leave or sell the home. As long as one of the homeowners continues to occupy the home as a primary residence, regardless of the status of the spouse there is no time limit to how long the remaining homeowner may stay in the home.
• Your home does not need to be free and clear. Elimination of the current mortgage is one of the most common reasons seniors apply for a reverse mortgage.
• You and your heirs retain 100% of the excess equity upon the sale of the home.

Qualifications

Little of the traditional criteria used to qualify for a mortgage applies to a reverse mortgage.

• LIttle or no credit qualifying
• Little or no income or minimum FICO requirements
• Past credit problems normally not an issue
• The qualifications are simple
  • The youngest homeowner must be 62 years of age or older
  • You must own a home or be purchasing a home that you will occupy as your primary residence
  • The home must meet standard FHA appraisal guidelines

Is it Safe?

AARP, the Federal Government, and the National Reverse Mortgage Lenders Association (NRMLA) have worked together to make the reverse mortgage one of the safest, most risk free financial transactions available to seniors.

The concept of a reverse mortgage originated in the mid '70's. During the early years it was unregulated and there were adverse consequences for many seniors.

In 1989, recognizing the incredible financial benefits that this program offers - seniors and AARP asked HUD to take control of the program, eliminate the risks and insure the loan.

Those Safeguards include…

When We Said Safe - We Meant It

1. To eliminate the need to shop for the 'Best Deal' the government regulates:

• Loan Amounts

• Loan Terms

• Loan Fees

2. HUD mortgage insurance guarantees:

That the loan is a non-recourse loan. Federal Regulations mandate that your reverse mortgage is a non-recourse loan. This simply means that under no circumstances can you or any member of your family be held personally responsible for repayment of any part of the debt above and beyond the value of the home at time of repayment. When the home is sold by you or your heirs, if the sale proceeds are insufficient to repay the debt in full the balance due the lender is either forgiven or paid by the government's insurance agency.

A borrower's loan proceeds are secure

No interruptions in servicing

3. Counseling

After we present the basic information, you must receive counseling from a HUD approved HECM counselor who will discuss the program and answer your questions.

4. According to the IRS, Reverse Mortgage proceeds are not income and as a result…

• Proceeds are not taxable (consult your tax advisor)

• No effect on Social Security

• No effect on Medicare

• Three day rescission period

How Can I Receive My Money?

• Option One: Lump Sum
• Option Two: Monthly
• Term: You can establish a monthly payment for set period of time.
• Tenure: You receive a fixed monthly payment for as long as you live in the home
• Or a combination.
• Modified Term: Fixed monthly payments for a set period of time, plus access to a line of credit.
• Modified Tenure: Fixed monthly payments for as long as you live in the home, plus access to a line of credit.

What Happens At The End?

Borrowers want to sell

• Property is sold

• Reverse Mortgage principal plus accumulated interest is paid

• Profit goes to the seller

Borrowers want to sell and use another Reverse Mortgage to purchase

• Combine a new reverse mortgage with the profit check from the sale above to purchase a new home.

One Spouse Passes

Nothing changes

Both Borrowers Pass

• Estate sells the house

• Reverse Mortgage principal plus accumulated interest is paid

• Profit goes to the estate

A reverse mortgage does not interfere with your right to select to whom you leave your home upon your passing. Once your home is passed to the heirs of your choice, the reverse mortgage comes due. Your heirs may either pay the balance due on the reverse mortgage and keep the home or sell the home and use the proceeds to pay off the reverse mortgage. If they sell the home, all excess proceeds are theirs to keep.