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A Reverse Mortgage Could Be Your Financial Lifesaver

A Reverse Mortgage Could Be Your Financial Lifesaver. Land/Home Financial Services, Inc. Presented By Name Here. Presentation Objectives. Who is Land/Home Financial Services, Inc. Reverse Mortgage General Info Reverse Mortgage Case Studies

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A Reverse Mortgage Could Be Your Financial Lifesaver

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  1. A Reverse Mortgage Could Be Your Financial Lifesaver Land/HomeFinancial Services, Inc. Presented By Name Here

  2. Presentation Objectives • Who is Land/Home Financial Services, Inc. • Reverse Mortgage General Info • Reverse Mortgage Case Studies • Explore how Financial Planner and Correspondent Lender May Work Together • How the Process Works

  3. Land/Home Financial Service’s Inc. Built on Knowledge, Commitment & Trust Since 1988 Our Mission… To provide diversified funding options and consistent, superior, personalized service to our clients and partners, including: homebuyers, mortgage brokers, builders, manufactured home retailers, credit unions and real estate agents.

  4. Why You Should Choose Land/Home… • Over 16 years in the mortgage business • Personalized service • Alternative loan options and competitive rates • Approved regional lender through Freddie Mac, Fannie Mae, FHA, and VA • The most comprehensive product mixes available on the market • Licensed in 47 states plus the District of Columbia • Quick turnaround time, lower rates and fees • On-line loan application and an on-line loan status • In-house underwriting, contract underwriting, document drawing, and funding departments

  5. 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.

  6. Typical Retirement Assets Illiquid Liquid Cash IRA, 401 K Stocks& Bonds House * Source: Federal Reserve

  7. Reverse Mortgage Details • Senior will never have to leave their home • There are no credit or income qualifications • No monthly mortgage payments • No repayment of the loan until the last borrower moves out permanently or passes away • Equity is tax-free* • Proceeds paid in lump sum, monthly payments, line of credit or any combination* • Interest may be tax-deductible upon loan repayment, please consult a tax advisor Benefits of a Reverse Mortgage Work: * Not all products and options available in all states. Please consult your tax advisor.

  8. Reverse Mortgage Details Cont. • Loan proceeds available to the borrower are based on three main factors: • Age of homeowner(s) • Appraised Value of home or Maximum Lending Limit • 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 other applicable charges

  9. Three Types of Reverse Mortgages • FHA/HUD Insured “HECM”(Home Equity Conversion Mortgage) • Home Value Limit = $312,895 • Fannie Mae HomeKeeper(Federal National Mortgage Association) • Home Value Limit = $359,650 • Financial Freedom Cash Account™ (Jumbo) • Virtually No Home Value Limit • Equity Release™ available • Standard Option • Zero Point™ Option • Simply Zero ™ Option

  10. Reverse Mortgages As a Retirement Planning Tool Proceeds can be used to fund a variety of financial products: • Augment Monthly Income through purchase of Annuity product • Long Term Care Funding • Estate Planning • Life Insurance and Investment FundingCharitable and Family Gifting • Retirement Home Purchase • Purchase of non-reverse mortgage products are available at additional costs through independent third parties

  11. Common Misconceptions • “The lender takes the house” • Homeowner retains full title to the property • 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. Reverse Mortgage Details Cont. • Origination fee • Closing cost • Servicing fee • Mortgage insurance premium Reverse Mortgage Costs

  13. Reverse Mortgages as an Estate Planning Tool (Case Study) • Client Profile: - 75 year old widow • Assets: - $750,000 home (primary residence) - $1,000,000 municipal bond portfolio (primary income source) - $500,000 IRA (from deceased husband) • Income: Combination of income from muni bond portfolio, required minimum distributions from IRA, and social security • Expenses: $75,000/year

  14. Reverse Mortgages as an Estate Planning Tool • Problem: Purchase enough insurance to transfer wealth to heirs, without affecting current income • Solution: Reverse Mortgage 1. Proceeds of $224,657 can be generated through the use of a reverse mortgage 2. The loan proceeds are used to purchase a single premium immediate annuity, with the annual net after tax payment equal to approximately $20,000 3. Gifts are made annually to a Trust in the amount of $20,000 4. Life insurance in the amount of $600,000 is purchased inside the Trust

  15. Reverse Mortgages as an Estate Planning Tool • Financial Impact to Client: • Reverse Mortgage has the impact of reducing the taxable portion of the Estate, and Life Insurance has the impact of increasing the non-taxable portion of the Estate • Financial Impact to Financial Advisor: - Annuity commission of 3% equals $6,500 - Insurance commission of 90% of 1st years premium equals $18,000 - Total commission of $24,500

  16. Reverse Mortgages as a LTC Planning Tool (Case Study) • Client Profile: - Couple, age 75 • Assets: - $2,500,000 home (primary residence) • Problem: - Client wishes to purchase LTC Policy • Solution: - Proceeds of $577,654 generated through use of reverse mortgage - Purchase SPIA, certain period 10-years on husband in amount of $124,359 - SPIA pays monthly premium of $1,223.92 to LTC carrier and at end of 10th year, policy is paid in full

  17. How the Process Works Like any other financial transaction, obtaining a reverse mortgage involves a few of steps designed to protect both you and the lender. Here are the steps you can expect to go through when you apply for your reverse mortgage with Land/Home.

  18. Step 1 – Initial Discussion • The first thing we like to do is talk to you • Either over the phone or in person • We talk about the pros and cons • how it works, how much money you might receive and anything else you’d like to know about. • Then you decide whether you want to take the next step.

  19. Step 2 – Counseling • If a reverse mortgage is the right choice, you receive free independent counseling. • This is from a certified, HUD-approved counselor • This is to make sure that you have had all your questions answered and that there’s been no confusion. • It’s a protection device that the government has built into the process of obtaining a reverse mortgage.

  20. Step 3 – Appraisal • Then we arrange for an appraisal to determine the objective market value of your home • Whether any repairs will be required to meet Federal Housing Administration guidelines.

  21. Step 4 – Inspection • A inspection is required to make sure that the home is structurally sound and that there’s no extensive termite or dry rot damage.

  22. Step 5 – Underwriting • After the appraisal and inspection reports come in we go through all the normal processing procedures that you might find in any mortgage.

  23. Step 6 – Closing • The final step is the closing where you receive the money, or proceeds, from your reverse mortgage. You can choose to receive the payment in one of three ways: as a lump sum, as a monthly payment or as a line of credit. • Then it’s up to you: pay bills, fix up the house, help a family member, or use the money to enjoy your life.

  24. What are the Possible Uses • Pay for home repairs and renovations • Long-term healthcare • Pay off existing debt • Healthcare and prescription drugs • Pay taxes • Help with your grandchildren’s education • Travel • Make car repairs or purchase a new car • Almost Anything You Want

  25. Phone: 800-241-5263 • Fax 925-765-3456 Loan Agent NameSenior Loan Agent Loanagent@lhfinancial.com • www.lhfinancial.com Equal Housing Opportunity Lender. Not a commitment to lend. Certain restrictions and conditions may apply. Not all applicants will qualify. Please note that these are basic guidelines and you should always check with your lender for your States exact lending guidelines You Should contact your tax advisor regarding taxes. CA Dept. of Real Estate 916-227-0931. Land/Home DRE. #988341.

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