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Reverse Mortgages Explained

Reverse Mortgages Explained. Presented by: NLB Financial, Inc 201 East Grand Avenue Suite 2B Escondido CA, 92025 A licensed FHA lender A licensed California Financial Lender. Todays Senior. 85% want to remain in home (AARP study) $3 trillion in home equity

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Reverse Mortgages Explained

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  1. Reverse MortgagesExplained Presented by: NLB Financial, Inc 201 East Grand Avenue Suite 2B Escondido CA, 92025 A licensed FHA lender A licensed California Financial Lender

  2. Todays Senior • 85% want to remain in home (AARP study) • $3 trillion in home equity • The senior population is getting older • The group of 65-74 is today 8 times larger than 1990 • The group of 75-84 is today 16 times larger than 1990 • The group of 85 plus is today 38 times larger than 1990

  3. Life style profile • Today’s senior has better health & they live a more active lifestyle • Persons over 65 today have an average life expectancy to age 83.1 years • 84.4 years for women • 81.4 years for men

  4. What Is a Reverse Mortgage? Reverse Mortgages are non-recourse loans that allow senior homeowners age 62 or older to convert home equity into cash • Without leaving their homes • Without income qualification • Without making monthly mortgage payments • Without having to repay the loan until they move out permanently, sell the house or die • Proceeds are tax-free and can be paid in lump sum payment, monthly payments, line of credit or combination thereof * • Interest may be tax-deductible upon loan repayment, please consult a tax advisor * Not all products and options available in all states

  5. How a Reverse Mortgage works • Loan proceeds available to the borrower are based on three main factors: • Age of homeowner(s) • Value and location of home • Current Interest rates • Loan is repaid at death or move out, and repayment never exceeds value of home • Amount repaid is principal, accrued interest, service fees and any applicable charges

  6. Current Reverse Mortgage Products • FHA/HUD Insured Home Equity Conversion Mortgage (HECM) • Fannie Mae’s Home Keeper • Financial Freedom’s Cash Account Advantage Not all products are available in all states

  7. Reverse Mortgage Examples HECM • Borrower: Couple, aged 70 and 68 • Value of Home: $500,000 • Eligible Proceeds: $197,5001 (or $1.264 monthly for life) Cash Account • Borrower: Single, aged 79 • Value of Home: $1,500,000 • Eligible Proceeds: $730,0002 1 As of October 31, 2006 and is after origination fees, HUD MIP, and other closing costs 2 As of October 31, 2006 and is after origination fees and other closing costs

  8. WHAT IS A “HECM”?The Home Equity Conversion Mortgageis a reverse mortgage designed by the U.S. Department of Housing and Urban Development (HUD) and insured by the Federal Housing Administration (FHA) to give older homeowners a vehicle for converting the equity in their homes to tax free cash!

  9. Uses for Home Equity Conversions Hospital/Health Care Costs Repay existing mortgages Reduce burden on children Home repair/Improvement Pay property taxes Daily expenses Travel, Something special Gifts Other 67% 55% 50% 50% 38% 29% 14% 3% As published by AARP/HUD A Subsidiary of Lehman Brothers Bank, FSB

  10. HECM has five payment options • Term Option: You will receive equal monthly payments for a fixed period of time selected by you. • Tenure Option: You will receive equal monthly payments for as long as you occupy your home as a principle residence. • Line of Credit: You may draw up to a maximum amount of cash at times in amounts of your choosing, as long as you occupy your home as a principle residence. • Modified Tenure Plan: allows you to set aside a portion of the loan proceeds as a line of credit and receive the rest in the form of equal monthly payments as long as you occupy your home as a principle residence. • Modified Term Plan: Allows you to set aside a portion of the loan proceeds as a line of credit and receive the balance as equal monthly payments for a fixed time period as specified by you.

  11. Common Misconceptions • “The lender takes the house” • Homeowner retains full ownership • Reverse Mortgage is a loan • “I can be thrown out of my home” • Homeowner can stay in home until loan maturity event occurs • “I can owe more than my home is worth” • Homeowner can never owe more than value of home • “My heirs will be against it” • Experience demonstrates heirs are in favor of Reverse Mortgages

  12. Consumer Protections • Mandatory independent counseling • Asset protection with “non-recourse” loan • Limitation on all fees charged no matter which lender a senior chooses • Interest rate is the same no matter which lender a senior chooses • No prepayment penalty & no penalty for canceling the loan • Monthly training for all Malan Financial Reverse Mortgage Specialist • Malan Financial is a member of NRMLA ( National Reverse Mortgage Lenders Association) Code of Conduct

  13. Cash IRA, 401 K Stocks & Bonds House Typical Retirement Assets

  14. Typical Retirement Income Cash IRA, 401 K Stocks & Bonds $

  15. Typical Retirement Income With a Reverse Mortgage Cash IRA, 401 K Stocks & Bonds Reverse Mortgage* $$$ *Proceeds from a Reverse Mortgage are Tax-Free

  16. For more information contactJoanne Brown (323 514-6480) Or e-mail (seniors@JoanneB-Brown.com)

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