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Reverse Mortgages

Reverse Mortgages. Your Company Logo. SAMPLE – NOT FOR PUBLIC USE. Learn how a reverse mortgage can help increase your retirement income and give you a better quality of life. Presented By: Your Name Your Company Name Phone Number. What Is A Reverse Mortgage?. SAMPLE – NOT FOR PUBLIC USE.

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Reverse Mortgages

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  1. Reverse Mortgages Your Company Logo SAMPLE – NOT FOR PUBLIC USE Learn how a reverse mortgage can help increase your retirement income and give you a better quality of life. Presented By: Your Name Your Company NamePhone Number

  2. What Is A Reverse Mortgage? SAMPLE – NOT FOR PUBLIC USE A reverse mortgage is a way to receive cash from the equity in your home. It is designed for homeowners ages 62 and over. You retain full ownership of your home and can not lose your home to the bank!

  3. Traditional Ways to get Money From Your Home SAMPLE – NOT FOR PUBLIC USE Sell your home Refinance the existing mortgage to take out extra cash Take out a home equity loan and make payments

  4. How Does a Reverse Mortgage Provide Money? SAMPLE – NOT FOR PUBLIC USE It lets you get immediate cash out of the equity in your home You never pay it back for as long as you live in your home The income is 100% tax-free

  5. Typical Uses For a Reverse Mortgage SAMPLE – NOT FOR PUBLIC USE Supplement your retirement income Buy a new car Make home repairs Use it as a financial planning tool Travel more frequently Help pay for a grandchild’s education Cover medical expenses.

  6. How You Get the Cash SAMPLE – NOT FOR PUBLIC USE In a lump sum As a series of monthly payments As a home equity line of credit (with possible annual increases) Any combination of the above methods

  7. When is the Loan Paid back? SAMPLE – NOT FOR PUBLIC USE When you pass away If you sell your home If you convert the home to a rental property If you permanently move out of the home If you fall behind on your property taxes If you let your homeowners’ insurance policy lapse Let the condition of your home deteriorate

  8. Additional Payback Criteria SAMPLE – NOT FOR PUBLIC USE You rent out your home or a portion of it You add another person to the title of the home You change the zoning classification of your home You take out another loan and use your home equity as collateral on the loan

  9. What Happens to the Borrowed Money? SAMPLE – NOT FOR PUBLIC USE The debt grows as you take out more cash and as interest is added to the balance As the amount you borrow gets bigger, your remaining equity gets smaller Your equity can increase if the value of your property goes up at a faster rate Initial Home Value: $300,000Amount of Loan: $200,000Appreciation Rate: 6%Mortgage Interest Rate: 6%

  10. Example of a Reverse Mortgage SAMPLE – NOT FOR PUBLIC USE Your home is worth $200,000 Your existing mortgage balance is $50,000 You receive $120,000 as a lump sum from the reverse mortgage Your new equity is now $30,000

  11. How Do You Qualify for a Reverse Mortgage? SAMPLE – NOT FOR PUBLIC USE You and any other co-borrower must be at least 62 You need to own your home (there can still be a mortgage on it) There needs to be significant equity in your home (you can’t take out cash if you have a high LTV mortgage) You need to live in your home at least 6 months out of the year You must agree to accept mortgage counseling from a HUD-approved counseling agency. Outstanding liens and existing mortgage balances must be paid off at closing Mobile homes typically are not eligible

  12. How Much Money Can I Get? SAMPLE – NOT FOR PUBLIC USE Available cash is based on: Age (more cash to older home owners) The value of your home The condition of your home Available equity in your home Current interest rates How you choose to take your money (lump sum, payments or credit line)

  13. Credit Line Example SAMPLE – NOT FOR PUBLIC USE Age: 77 Home Value of $312,895 or more Interest Rate: 6.48% You get a credit line of approximately $218,000*. The unused balance credit line increases at the current interest rate Amount is based on standard guidelines of the HECM program at the time this presentation was developed, and may change at any time.

  14. How Much Will I Owe? SAMPLE – NOT FOR PUBLIC USE You will owe the amount of money borrowed plus the total accrued interest You will never owe more than the value of the home Your heirs will have no payment liability if you owe more than the home is worth (the lender assumes the risk) The lender can NEVER take your home from you!

  15. How Much Does it Cost? SAMPLE – NOT FOR PUBLIC USE The only out of pocket fees are an appraisal (average cost of $350) and perhaps a credit check Other costs and fees are typically financed in the loan amount The financed costs are included in the loan balance

  16. What Are the Financed Costs? SAMPLE – NOT FOR PUBLIC USE The costs are typically the same as those in a traditional mortgage: Lender fee Loan origination fees Title search and title insurance Loan escrows of taxes and insurance Recording fees Annual mortgage insurance premium Annual service fee (added to your loan balance)

  17. Home Equity Conversion Mortgage SAMPLE – NOT FOR PUBLIC USE The HECM is insured by the federal government The FHA tells the lenders how much they can lend to you, based on your age and the value of your home The amount you or your heirs will owe can not exceed the value of your home If you home is worth more than the amount owed, you or your heirs keep the difference If your mortgage balance exceeds the value of your home, the FHA insurance pays back the lender

  18. The 5 Types of HECM Payment Options SAMPLE – NOT FOR PUBLIC USE 1) Term Option: You will receive equal monthly payments for a fixed period of time selected by you. 2) Tenure Option: You will receive equal monthly payments for as long as you occupy your home as a principal residence. 3) Line of Credit Option: You may draw up to a maximum amount of cash at times and in amounts of your choosing, as long as you occupy your home as a principal residence. (Option not available in Texas.) 4) Modified Tenure Plan: Allows you to set aside a portion of loan proceeds as a line of credit and receive the rest in the form of equal monthly payments. 5) Modified Term Plan: Allows you to set aside a portion of loan proceeds as a line of credit and receive the balance as equal monthly payments for a fixed time period as specified by you.

  19. How Do HECM Payments Affect My Benefits? SAMPLE – NOT FOR PUBLIC USE HECM payments do not affect your Social Security or Medicare benefits because those benefits are not based on your assets, and the payments are not considered to be income. For the federal Supplemental Security Income program, beneficiaries must keep their liquid resources under certain limits. If you do not spend HECM advances in the month received, then such funds are considered part of your liquid resources and may adversely affect your eligibility for SSI.

  20. Take the Next Step SAMPLE – NOT FOR PUBLIC USE Learn how much cash you qualify for Let us help you put together a financial analysis worksheet to see how you will benefit from a reverse mortgage Schedule an appointment with family members so we can educate them on how you will benefit from a reverse mortgage Obtain a copy of the Fannie Mae publication- Money from Home: A Consumer's Guide to Reverse Mortgage Options

  21. Conclusion SAMPLE – NOT FOR PUBLIC USE A reverse mortgage can provide you with cash to improve your quality of life A reverse mortgage can eliminate the current mortgage payments you may be making on your home You can never lose your home to the bank or lender with a reverse mortgage You or your heirs can never owe more than your home is worth

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