Reverse
Mortgages
Mortgages
for people who are
62 years old or older
|
Reverse
Mortgages |
There
are TWO Popular Programs for Qualifying Seniors
Q What are the "HECM" and "Home Keeper" Mortgage programs?
A These programs are special types of mortgage loans that enable you, as an older homeowner, 62 years of age or older, to tap into the equity you have in your home while giving you the maximum amount of flexibility to address your particular financial needs.
|
You
may choose a lump sum payment
to pay
off debts,
fix
up your home or
other expenses.
|
|
You may wish to receive regular monthly payments to supplement your income or a line of credit that you can tap into at anytime.
You may be able to combine the cash, monthly payment or credit line options if that fits your needs.
With the "Home Keeper" program you can also get cash to help you purchase a new home.
Unlike traditional home equity loans, no repayment of the "HECM" or "Home Keeper" mortgage is required until you no longer occupy the home as your principal residence. At that time, the loan becomes due and payable.
With either of these reverse mortgage programs, you borrow against the equity of your home, and receive loan proceeds according to the payment plan that you select. These plans are described as you continue to read on.
As a borrower, you may change payment plans as many times as you wish, unless you take the full amount available in a lump sum at closing.
When you SELL your home or VACATE it for other reasons, the accrued interest plus what the lender has paid to you or on your behalf through the years is due and payable, usually out of the proceeds from the sale of your home.
Any proceeds in excess of the amount owed on the loan belong to you and your estate.
Q How do the "HECM" and "Home Keeper" differ from a Home Equity Loan?
A While both programs and a 'Home Equity' Loan enable you to turn the equity in your home into spendable dollars, there are some important differences between the two types of mortgages.
With a 'Home Equity' loan, you must make regular payments to repay the loan. These payments begin as soon as the loan is originated.
To qualify for a 'Home Equity' loan, you must earn a monthly income great enough to make those payments.
If you fail to make the monthly payments, the lender can foreclose, and you could be forced to sell your home.
In addition, you may be required to requalify for a home equity loan each year.
If you do not requalify, the lender may require you to pay the loan in full immediately.
 |
Q
Who is eligible
for a "HECM" or "Home Keeper" ?
A You, an any co-borrowers, must be at least 62 years old. The home must be owner occupied.
|
(1) You must own your home free and clear or
(2) You must not have more debt than could be repaid from the proceeds of the new reverse mortgage.
(3) You must also agree to accept (free of charge) mortgage counseling from HUD-approved counseling agency. We encourage family members, friends or other advisors to attend this counseling session with you.
Q Must I pay off any loans or liens that are against the property?
A All prior loans or liens must be paid off to get a "HECM" or Home Keeper; but they can be paid off with the proceeds from the reverse mortgage.
Q What are the minimum and maximum amounts that I can borrow?
A (1) There is no minimum borrowing amount. (2) The maximum amount you can borrow from the "HECM" plan differs from the "Home Keeper".
Both plans factor in the age of the youngest borrower, the expected interest rate and the "maximum claim amount" (for the HECM) or the "adjusted property value" (for the Home Keeper).
The maximum claim amount or the adjusted property value is the lesser of the appraised value of your home or the maximum loan amount for a 1 to 4 unit residence as determined by FHA or Fannie Mae in your area. There is no upward limit on the value of your home.
| The HECM Program Offers (5) Five Payment Options |
| Term |
| Tenure |
| Modified Term |
| Modified Tenure |
| Line of Credit or Cash |
 |
Q
What are the Payment
Options that are available with the "Home Keeper Mortgage"?
A There are "3 Payment Options" that are available: |
(1) Tenure = Monthly payments as long as you own and occupy the property.
(2) Line of Credit = You may withdraw at times, and in amounts of your choosing, up to the maximum amount of cash available; as long as you own and occupy the property.
(3) Modified Tenure Option = Is a combination of the two above, called a Modified Tenure option.
Q How will the amount of the monthly payment be calculated?
A Your payments will be calculated using the HUD/FNMA computer software.
Factors that affect the amount of money you will receive include: the age of the youngest borrower, current interest rate, maximum claim amount, and the length of time that you will be receiving payments, whether it be for a fixed period of time (term option) or for as long as you live in the home (tenure option).
The older you are, the larger your monthly payments are likely to be.
Q Will "HECM" payments affect my Social Security, Medicare Supplemental Security Income, or Medicaid benefits?
A "HECM" payments do not affect your Social Security or Medicare benefits. Those benefits are not based on assets of the recipient.
"HECM" advances may be added to your liquid assets under some programs if not spent in the month received, and may affect your eligibility for some programs.
We suggest you consult the local offices for these programs or any others to determine how "HECM" payments may affect your particular situation.
Q How can I find out about the "FHA Tenure Payment Plan"?
A We have a chart a "Maximum Claim Amount" or "Property Value" (whichever is less). This chart and/or fees can be explained to you, if full if you are interested.
These figures are approximate and assume: a single borrower, an effective interest rate, the financing of closing costs and the initial mortgage insurance premium, and a $30.00 dollar monthly service fee.
Q Does the "FNMA" program also known as the "Home Keeper" also has a Payment Plan"?
A We have a chart showing examples of a "Actual Property Value" or "Adjusted Property Value" (whichever is less). This chart and/or fees can be explained to you, if full if you are interested.
Their is mortgage insurance premium, and a $30.00 dollar monthly service fee.
The maximum "adjusted property value" as used in the Fannie Mae (FNMA) "Home Keeper" program is $300,700 in the continental United States.
| Q
Will I have to pay
fees to obtain a "HECM" or "Home Keeper"
A Yes, however, your out-of-pocket expenses is only $300 paid to start either loan. This deposit will be credited to your closing costs. All other closing costs and fees can be financed into your loan. Both loans have an origination fee, mortgage insurance premium, and other normal closing costs. |
Q Are there any ongoing fees after closing?
A Yes, both loans have a monthly servicing fee. The "HECM" also has an annual insurance fee.
These fees will be included in your loan balance as the charges occur.
Q Can I be forced to sell or vacate my home if the money I owe on the loan ever exceeds the value of my home?
Absolutely not, as long as you continue to occupy the property as your principal residence.
You cannot be forced to sell or vacate the property, even if the total amount you owe on this loan exceeds the value of the property; or if the fixed term over which you received monthly payments has expired.
No deficiency judgment may result from your loan.
FHA and Fannie Mae insurance cover any further obligation to the lender.
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Q Will my heirs owe anything to the mortgage lender if I die? A Upon your death, the loan balance consisting of principal paid to you or on your behalf, plus any accrued interest, becomes due and payable. Your estate may choose to repay the loan by selling the property or they may want to pay it off by other means so they can keep the home. If the loan should exceed that value of your property, your estate will owe no more than the value of the property; the mortgage insurance will cover any balance due to the lender. No additional financial claims may be made against your heirs or estate. You will never owe more than your property is worth! |
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Q If my home appreciates in value during the mortgage term, who will be entitled to that money.
A You or your estate are legally required to pay back to the lender only the outstanding balance due.
Any money remaining after the mortgage is paid belongs to you, or upon your death, to your estate.
 |
Q
What if I decide
to sell my home?
A If you choose to sell your home, the outstanding balance becomes due and payable to the lender. Any proceeds left over once the loan is paid belongs to you. |
Q Can I sell my home to my children and continue to live in it?
A If you sell your home to your children or any other individual (or simply give them title), the loan will become due and payable.
After the loan is repaid, any arrangement for your continued occupancy of the property must be made with the new owners.
Q Is this a fixed rate loan?
A There are no fixed rate HECM or Home Keeper Loans.
Q Is this a fixed rate loan?
Print
a Residential
Loan Application for Reverse Mortgages aka FNMA 1009.
Fax the Application back to (619) 255-7442
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All programs,
rates and terms are for broker use only and are subject to change without
notice.
