YOUR COMPLETE REVERSE MORTGAGE GUIDE

MAKE THE MOST OF RETIREMENT!!

Homeownership is likely the most important wealth-building move you made in life.  When you retire and your income flow changes, the home equity you've built over the years can serve as a financial resource.  If you are a retiree looking for a way to manage your expenses, preserve your legacy and promote your peace of mind, a reverse mortgage may be just the solution for you.

PROGRAM OVERVIEW

What Is A Reverse Mortgage?

A reverse mortgage allows you to borrow against the equity you've established in your home.  To be eligible, you must be age 62 or older and own your home free and clear or have a remaining mortgage balance that can be paid off by the reverse mortgage.

You'll wnat to consult a tax advisor to confirm this, but in most cases a reverse mortgage gives you access to tax-free funds.  Instead of making payments, you can choose to receive them.  That's the "reverse" part of a reverse mortgage.

Why Get A Reverse Mortgage?

There are no restrictions on how you may use proceeds received through a reverse mortgage.  You can direct the funds toward a variety of purposes, including:

• Reducing high-interest debt
• Supplementing retirement income
• Remodeling or repariring your home
• Paying property taxes
• Covering healthcare expenses
• Planning for long-term care needs

You can even use your reverse mortgage funds to purchase a second or vacation home!

How Does It Differ From A Traditional Home Loan?

With a traditional mortgage or home equity loan, homeowners borrow a large amount of money and make monthly payments.  They also need a sufficient debt-to-income ratio to qualify and make monthly mortgage payments.  A reverse mortgage pays you, and is available regardless of your current income or debt-to-income ratio.

3 Essential Facts

Making an educated decision begins with undoing common misconceptions that keep many senior homeowners from looking into the advantages of a reverse mortgage.  Contrary to what you may have heard -- as long as all property tax, insurance and maintenance requirements are met:

1. You cannot owe more than the value of your home
2. You retain title to the property
3. You receive payments instead of making them

As long as all program requirements are met, if an individual borrower is hospitalized, or wants to spend six months in Florida, she cannot be forced to move.  If one reverse mortgage co-borrower moves to a nursing home or passes away, the other(s) cannot be forced to move.

LOAN SPECIFICS

Eligibility Requirements

Reverse mortgage eligibility requirements are quite simple.  There are no income, employment or credit qualifying restrictions.

• All homeowners must be age 62 or older and occupy the property as their principal residence
• The home must be owned free and clear or have a remaining mortgage balance that canbe paid off by the reverse mortgage
• The property must be a single-family or a one-to-four unit, owner-occupied dwelling
• Townhomes, detached homes, condominium units, planned unit developments (PUDs) and some manufactured homes are eligible
• The home must meet Department of Housing and Urban Development (HUD) minimum property standards; in some cases, home repairs can be made after a reverse mortgage closing

How Much Can Be Borrowed?

In most cases, maximum reverse mortgage loan amounts are based on the following factors:

• Age of the youngest homeowner
• Appraised value of the home
• Current interest rate
• Locally established lending limit

In general, the older you are, the more your home is worth, and the lower the interest rate, the more you'll be able to borrow.

Payment Options

Reverse mortgage customers have differing needs.  Some would rather receive their entrie loan amount up front, while others prefer a steady monthly stream of funds to supplement their other income.  Regardless of how you choose to receive your proceeds, you can adjust your plan as often as you wish to accommodate changing needs.

Reverse mortagage funds distribution plan options include:

• Lump Sum - A specific amount is made immediately available (often used to pay off an existing mortgage)
• Term - Funds are released in set monthly amounts for a set period requested by the customer
• Tenure - Loan proceeds are distributed in equal monthly allotments for as long as at least one customer continues to occupy the home as a principal residence
• Line of Credit - Funds remain available for the customer to drwo on as needed
• Combination - Customers receive any combination of lump sum, monthly or line of credit distributions

Interest Rate

Reverse mortgages are variable-rate loans.  In most cases, you may choose monthly or annual adjustments.  Interest rate adjustments have no effect on the number of loan advances you can receive, but they do cause your loan balance to grow at a faster or slower pace.

Loan Repayment

Please ask me for details about when repayment may be due.  The balance due can come from home sale proceeds, or from other resources, such as savings, insurance or possibly applying for a new mortgage.  There is no requirement that the home be sold, only that the loan be repaid.

Effect On Other Benefits

Reverse mortgage loan proceeds are not considered income and will not affect Social Security or Medicare benefits.  However, receiving monthly reverse mortgage advances could affect your eligibility for some public assistance programs that are based on need.  Consult a local attorney to determine how - or if - a reverse mortgage funds-distribution plan might apply to your specific situation.

THE REVERSE MORTGAGE PROCESS

Education

The process of getting a reverse mortgage begins with the phase you are in now.  You are taking the time to get information and learn more about this kind of home financing to determine if it is right for you.

Counseling

Reverse mortgage applicants are required to participate in a consumer education session with a HUD-approved counselor.  Family members an other advisors are welcome to accompany you.  The counselor will explain the legal and financial obligations of a reverse mortgage and discuss other financing alternatives to help ensure you make the right decision.

Counseling session attendees receive a Certificate of Borrower Counseling, which is valid for 180 days.  You must present this certificate to your lender as proof that you have fulfilled the counseling requirement.

Application

I will help you complete and sign your reverse mortgage loan application.  Shortly after the application is submitted, as required by the federal Truth-In-Lending Act, you will receive a disclosure that outlines your total estimated loan cost.

Appraisal

A professional appraiser will be contacted to determine the value of your home, and this will be used to calculate the amount you can receive from your reverse mortgage. 

Homeowners Insurance

Before your reverse mortgage closing, you will be required to show proof you have purchased insurance that covers losses due to fire, theft or natural disasters.  If you already have homeowners insurance, make sure your policy is up to date, payments are current and you have the minimum amount of coverage required by your lender.

Mortgage Insurance

Mortgag insurance will also be required to close your reverse mortgage.  This will ensure that the amount required to repay your loan will never exceed the value of your home when payment is due.  Typically, your initial mortgage insurance premium can be financed as part of your reverse mortgage loan amount.

Title Insurance

There are two types of title insurance.  One protects the lender and one protects the borrower.  Together, the coverage protects you and your lender from claims against ownership of the property, which might be made by:

• Undisclosed spouses
• Heirs of previous owners
• Creditors holding liens against previous owners

You will be required to purchase a title policy that covers your reverse mortgage lender's interest in the property.  The decision to purchase a policy that protects your interest is up to you.  I can recommend several title insurance companies you can contact for additional information about policies available in your area.

Closing

Processing and underwriting your reverse mortgage generally takes approximately six to eight weeks before you are ready to close.  Your closing must be coordinated with many parties, which may include: you, your lender, your attorney and the title company representative.

Before The Closing - I will help you go through a loan closing checklist to make sure the following items are in order:

• Closing costs and escrow amounts - Your Good Faith Estimate may not include all closing costs such as interim interest or property taxes.  You will need to finalize your actual costs with your attorney or closing agent to avoid last-minute surprises.
• Acceptable method of payment - In most cases closing costs may be financed as part of the reverse mortgage.
• Any additional items needed - Some counties require photo ID, evidence of hazard or flood insurance or other miscellaneous documents.  This is the time to gather all the paperwork that may be required at closing.

At Closing Time - Reverse mortgage closings typically take place in the home.  The loan documents, including the mortgage or deed of trust, are forwarded to you to read and sign as instructed, and pay any applicable closing costs.  Any funds disbursements due to you will be forwarded from the processing center shortly thereafter.

After The Closing - As a reverse mortgage customer, you have responsibilities similar to those associated with a traditional mortgage, such as paying your property taxes, keeping your insurance coverage up-to-date and maintaining the home.

Contact me with your questions about this and other loan programs! --- (504) 818-0400