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REVERSE MORTGAGE FAST FACTS

What is a Reverse Mortgage?
What Programs Do You Offer?
How do I Qualify?
For How Much Do I Qualify?
Counseling
How Will The Money Be Paid to Me?
Can I purchase a home with a reverse mortgage?
Closing Costs
Interest Rate
Impact on Income Taxes and Social Security
Repayment
What can I do with the money I recieve from my reverse mortgage?
A Simplified Reverse Mortgage
Some Common Myths

What is a Reverse Mortgage?
A reverse mortgage is a unique financial tool that enables homeowners ages 62 and over to tap into their home's equity, receiving either a monthly income, lump sum of cash or a line of credit. There are no income or credit qualifications and there is no repayment until the homeowner permanently leaves the home. The borrower retains full ownership of the property.

What Programs Do You Offer?
We offer all the government insured programs (HECMs and Fannie Mae HomeKeeper.) We also offer the fixed rate HECM, The Independence Plan™ , Simple Equity, Cash Account, and others.

How do I Qualify?
Applicant(s) must be at least 62 years of age and must own their home free and clear, or nearly free and clear - in many cases borrowers use the reverse mortgage to pay off existing liens or mortgages, which eliminates their monthly loan payments. Borrowers must also live in their home as their primary residence, which means that they should not live elsewhere for more than 365 consecutive days.

Commercial properties are currently ineligible for reverse mortgages.

For How Much Do I Qualify?
The loan amount is based on the home value, the number and age of the homeowner(s), the current interest rate and the maximum allowable home value.

The maximum allowable home value varies depending on the reverse mortgage program selected. The FHA-Insured Reverse Mortgage Program has limits, called Maximum Claim Amounts. This amount varies by county, $362,790.00 currently in our area (most of Northern California). The Fannie Mae Home Keeper program has a nationwide limit of $417,000.00. NRMLA reverse mortgage calculator or AARP reverse mortgage calculator can give you an idea of the amount for which you might qualify.

If your home is worth $700,000.00 or more you might also want to consider The Independence Plan, or another proprietary program.

Counseling
All borrowers are required to receive counseling from a third-party counseling agency prior to applying for a reverse mortgage. I can help you with the arrangements at the appropriate time and refer you to a HUD certified counselor.

How Will The Money Be Paid to Me?
Reverse mortgage borrowers can choose from several payment plan options:
a. Tenure: Borrower receives a monthly check for as long as they live in the home.
b. Line of Credit: Borrower can draw up to a maximum amount at the times and in the amounts of the borrower's choosing.
c. Lump Sum Cash Advance: A lump sum of cash distributed to borrower at closing.
d. Modified Tenure: Any combination of the above options.

Can I purchase a home with a reverse mortgage?
Yes! The Home Keeper for Home Purchase program enables seniors to obtain a Home Keeper mortgage in connection with the purchase of a new home - in a single transaction. The transaction reduces the out-of-pocket cash needed by the consumer to buy a new home, eliminates any new monthly mortgage payment, and helps the consumer keep more of the sales proceeds from their old house - or a larger amount of savings - to use for other purposes.

For example , let's say a 76-year-old woman sells her home for a $75,000 profit and wants to buy a new home in sunny Florida costing $115,000. To avoid a mortgage payment on the new house, she would need to pay $115,000 in cash. This means she would have to use the entire $75,000 from the sale of her first home, plus another $40,000 from her savings. If she doesn't have the $40,000, she couldn't buy the new house, unless she qualifies for a new home mortgage, which might be difficult and which in any event would require making monthly mortgage payments again.

Alternatively, the woman could purchase the new home outright, or nearly so, using money from a Home Keeper reverse mortgage, plus the sales proceeds from her old house.

This product might be used, for instance, by older homeowners who want to sell their old home and move closer to their children or to a warmer climate, or to move into a home that provides greater accessibility.

Home Keeper is a registered trademark of Fannie Mae.

Closing Costs
Closing costs are financed into the loan, and include the appraisal, title insurance, origination fee and recording fees. I will provide you with a good Faith Estimate of the closing costs at the time the application is taken.

Interest Rate
The interest rate charged varies depending on the reverse mortgage program selected by the borrower. All programs offer adjustable rates, and have lifetime caps on the maximum allowable rate. Please call me for a quote on the current rates.

Impact on Income Taxes and Social Security
Proceeds from a reverse mortgage are considered to be a loan, not income. Therefore, the funds received are not subject to income tax and do not affect Social Security Benefits. Borrowers receiving Medicaid or SSI may not be affected if the funds from the reverse mortgage are spent in the month they are received. As always, we recommend you consult your tax advisor for further details.

Repayment
The reverse mortgage becomes due and payable at the time the borrower permanently leaves the home. The reverse mortgage can be repaid either from the proceeds of the sale of the property, other liquid assets or by obtaining a conventional mortgage to pay off the reverse mortgage.

The loan balance consists of the financed closing costs, the cash that was advanced to the borrower and any interest that accrued. Remaining equity belongs to the borrower or their heirs. The reverse mortgage is subject to a non-recourse limit, which states that only the loan balance or the fair market value of the home, whichever is less, must be repaid .