Your Mortgage
Options Related to Retirement
Get
"INTERESTed" in Your Equity!
One of the most exciting mortgage products
for active "fifty-something" Americans is the Reverse
Mortgage. If your retirement
funds need a boost, consider this specialty mortgage which REVERSES
what you have done for so long…paid your monthly mortgage
payment; now your Lender pays you! The payment "stream"
is reversed! Further, you never have to worry about the income
affecting your social security income or any other retirement
benefit programs…and it's tax-free!
It has also been called the "Age In Place"
mortgage which provides significant security to the homeowner.
It has been called an "Equity Release" mortgage product
as it allows you stay in your home without selling it to take
advantage of the equity you have built over the years, and convert
that cash to finance anything you wish: living expenses; home
improvements and/or repairs; travel; medical bills or in-home
health care; investments…just about anything you can think
of! However, the single most often priority choice is for
supplementing retirement income! Money you can count on…a
great enhancement to retirement funds!
Further, the cash advance payments you receive
are TAX-FREE and backed by the government and/or major financial
institutions…completely absent of any further mortgage payments
during the term of the loan! As no monthly payments are made,
the loan balance becomes larger, with the equity getting smaller….thus,
the term "REVERSE!"
The amount for which you would qualify depends
on some of the traditional factors you are familiar with as a
homeowner: the value of the property, prevailing interest rates,
etc. Additional factors are your age at the time you apply and
the type of reverse mortgage in which you are interested. Overall,
the greater your age and your equity, the greater the benefit.
You can receive your payments as a lump sum, fixed monthly payments,
a line of credit, or a combination of these options.
You still hold title to your property and pay
your homeowners' insurance and taxes…and attend to upkeep
as you have in the past.
There is a "non-recourse" benefit
to a reverse mortgage. To simplify: You never owe more than the
property's market value…regardless. Should the property be
sold by you or your heirs, the excess proceeds are given to the
borrower or the borrower's estate.
"I'm
INTERESTed...What Does It Take to Qualify?"
- There are no credit or income requirements!
- You must be 62 years of age or older.
- Co-op apartments or non-permanent mobile
homes do not qualify; however, if your manufactured home is
on the tax rolls as a real estate classification, and on a permanent
foundation, you may qualify, if your home was manufactured after
June, 1976.
- Your mortgage does not necessarily have
to be paid off to qualify!
Although most individuals have their homes paid in full, this
is not required; you can use a cash advance from your reverse
mortgage to pay off your current mortgage; however, your equity
must be able to pay off your mortgage as part of the qualifying
process, and any other liens which may be on the title to your
property.
- The desire to occupy your home as your Primary
Residence, or for life.
Your spouse (last surviving borrower) is protected fully unless
the property is sold, he/she moves to another principal home,
or passes away. At this time the loan becomes due and payable.
HOW DO I GET STARTED?
After you've reviewed the various types
of reverse mortgage products, let us know your goals! Specify
them in your email to: SeniorDivision@1stopmortgage.net.
Please be advised that, prior to application
for a reverse mortgage, an educational session with an independent
mortgage counselor is required, as in FHA requiring that certain
borrowers receive proof of homebuying information and provide
documentation that they have done so. The counselor's job is primarily
to educate you about reverse mortgages and alternative options
available to you. Reviewing with you to determine which particular
reverse mortgage product would best meet your needs is also done.
This counseling session is at no cost to the borrower and can
be done in person or over the telephone. Documentation will be
provided to you which indicates completion of this session requirement.
At that time you can proceed with application.
REVERSE Mortgages…What
Kinds Are There?
The four mortgage types available in the United
States are as follows:
- Fannie Mae HomeKeeper
- This reverse mortgage type was created
by Fannie Mae less than 10 years ago for homeowners who
wish to continue living in their current property. It allows
them to receive loan proceeds through various payment options.
The amount received is based on age, number of borrowers,
and the adjusted value of the property. Free-and-clear and
low mortgage balance properties are elgible. Today, Fannie
Mae is the largest purchaser of home mortgages and the leading
investor in reverse mortgages. Fannie Mae requires that
the property be a single family residence, a condominium,
or a PUD (Planned Urban Development) property. Availability
is in all states.
- Although FHA's HECM reverse program
had been in place since the late 1980's, the needs of other
American seniors were not being addressed; thus, Fannie
Mae bridged the gap and addressed higher-value properties,
certain condominiums, and seniors as well as those who wished
to Purchase a home. Trust properties and qualified leaseholds
are eligible in the Fannie Mae programs.
- A one-time upfront fee equal to 1% of
the adjusted home value is charged by Fannie Mae and a monthly
servicing fee which varies from $15.00 - $30.00. Financing
of these costs is available.
HomeKeeper's interest rate adjusts monthly and is based
on the 1-month secondary market CD rate. A lifetime cap
applies.
- Fannie Mae HomeKeeper for
Home Purchase
- This 1-transaction purchase program
allows you to convert your present home to a reverse mortgage
and utilize a lump sum to purchase another home. The great
advantage is that it reduces out-of-pocket expenses, eliminates
any mortgage payments due, even on the new purchase, and
allows you to keep sales proceeds from the present property.
- Fannie Mae also requires in this
Program that the property be a single family residence,
a condominium, or a PUD (Planned Urban Development) property.
Availability is in all states.
This option can be ideal for relocating retirees!
- FHA'S HECM (Home Equity
Conversion Mortgage)
- This is FHA's federally-insured reverse
mortgage type, guaranteed by FHA/HUD with a maximum lending
limit of $261,609.00.
It was the first reverse mortgage and became available in
the late 80's.
This program requires that your home be a single family
dwelling, a federally-approved condominium, or a PUD (Planned
Urban Development).
The HECM has flexible payment options and expanding credit
lines; however, borrowers must pay up-front an FHA insurance
premium equal to 2% of the loan amount and annually thereafter
a premium equal to ) 0.5% of the loan amount.
- HECM's interest rate is adjusted either
monthly or annually; you choose, but if you choose the monthly
payment option, that amount will not change. What the adjustment
will affect is the total interest charged and added to the
mortgage balance during the term and when it becomes due.
- Financial Freedom Cash
Account
- This is a specialty "Jumbo"
reverse mortgage, available in 21 states and the District
of Columbia.
RECAP
& "A Bit More" About Reverse Mortgages
Choices of receiving monetary benefits from
a reverse mortgage can be in the following ways: lump sum payment,
fixed monthly payments for life, or a line of credit. Fixed monthly
payments for a specified period of time can also be arranged.
Perhaps you would want to have a combination of monthly payments
as well as a line of credit.
The interest rate charged on a reverse mortgage
is usually an adjustable rate that changes monthly or annually;
however, the monthly payments received by the senior doesn't change.
Some reverse mortgage products also involve
the purchase of an annuity that can assure continued monthly income
to the senior homeowner even after they sell the home. This is
because the use of projected life expectancies are utilized in
determining the loan size of the reverse mortgage. A reverse mortgage
isn't repayable until you no longer occupies the home as your
primary residence. This can occur if the sole remaining borrower
dies, sells the home or moves out, perhaps to a nursing facility
which would then become your principal residence.
The repayment obligation for a reverse mortgage
is equal to the principal balance of the mortgage + accrued interest
+ any finance charges paid for in the mortgage. This repayment
obligation, however, cannot exceed the value of the home. The
borrower, or the borrower's heirs or estate, with or without the
sale of the home, may elect to repay the mortgage and retain the
property.
If the home is sold and the proceeds exceed
the repayment obligation, the excess funds are dispersed to the
borrower or borrower's estate. Should the sales proceeds be less
than the amount due, the shortfall is usually covered by insurance
or some other party and is not the responsibility of the borrower
or the borrower's estate.
You cannot be forced to sell your home
to repay a reverse mortgage as long as you occupy the property,
even if the total of the monthly payments to you exceeds the value
of the property!
HELPFUL
RESOURCES
Jot These Down!
- For more information, Call Fannie
Mae directly and request their free booklet, Money From Home.
(800) 732-6643.
- For more information, Call HUD directly
and request further consumer data: (888) 466-3487.
E-MAIL: SeniorsManagement@1stopmortgage.net
