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Reverse Mortgages

Reverse Mortgages. Credit Union Mortgage Association 9693-A Main Street Fairfax, VA 22031 (800) 231-8855 www.CUmortgage.net. A New Kind of Mortgage Loan….. in Reverse: “Reverse Mortgages”. What is a Reverse Mortgage?.

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Reverse Mortgages

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  1. Reverse Mortgages Credit Union Mortgage Association 9693-A Main Street Fairfax, VA 22031 (800) 231-8855 www.CUmortgage.net

  2. A New Kind of Mortgage Loan….. in Reverse: “Reverse Mortgages”

  3. What is a Reverse Mortgage? A Reverse Mortgage is a unique loan that allows homeowners age 62 years and older to convert part of the equity in their home into monthly income or cash without having to sell the home, give up title, or take on additional monthly mortgage payments.

  4. Reverse Mortgages • No monthly mortgage payments • No loan repayment until the member moves out permanently (sells home, passes away, etc.) • Member will never have to leave their home

  5. Qualifications For Reverse Mortgages • Applicant members must be at least 62 years of age • Must be a homeowner (single family residence, condo, townhouse, manufactured housing built after June 1976) • Home does NOT need to be owned “Free&Clear”* • No income or medical requirements to qualify • No credit or credit score requirements *Basic qualifications typically require an equity position between 30-35%

  6. Reverse Mortgage loan proceeds are Tax-Free* and can be paid to the member in several ways: • Single Lump-Sum advance at funding • Line of Credit allowing members to draw on available funds whenever necessary • Annuity - Fixed regular monthly income payments to the member • OR a combination of ALL the options above (Example: ½ lump sum; ¼ line of credit; ¼ monthly income/annuity payments) * Certain tax implications may apply for lump-sum payments. Interest may be tax deductible upon loan repayment, please consult your tax advisor.

  7. Uses for Reverse Mortgage Proceeds • Repay existing mortgages • Home repair / home improvement • Pay property taxes and homeowners insurance • Supplemental retirement income / daily expenses • Hospital / health care costs • Preserve home / inheritance for heirs (prevent foreclosure) • Travel / something special (car, RV, ect..) • Gifts to family members • Reduce burden on children

  8. How Much Will a Member Qualify For? The amount a member qualifies for depends on the following: • Age of the homeowner (in case of couples the principle limit is based on the younger of the two and both must be 62 years of age or older to qualify) • Appraised value of your primary residence ~ Single Family Residence, Condominium or Townhouse) • Geographic location of home due to lending limit restrictions • Current interest rates • www.CUmortgage.net

  9. When Do I Pay Back the Reverse Mortgage? • The Reverse Mortgage is repaid when the member's cease to occupy their home as a primary residence (sell, move out, pass away, etc.) • Repayment amount includes principal, accrued interest, monthly MI premiums and servicing fees • No monthly payments are due on a Reverse Mortgage while it is outstanding • Repayment will NEVER exceed the value of the home

  10. Closing Costs • Appraisal • UFMIP - Up Front Mortgage Insurance Premium (if applicable) • Origination Fee • Title insurance • Recording fees • Other typical and customary closing fees *All closing costs are typically included in the loan which means no out of pocket expense

  11. Myth vs. Fact:Common Misconceptions Regarding Reverse Mortgage Loans MYTH: The lender takes ownership of the house FACT:Homeowner retains ownership. The loan is secured by a deed of trust or a mortgage just like a conventional mortgage, however the member’s DO NOT MAKE PAYMENTS as long as they live in the property.

  12. Myth vs. Fact (cont’d):Common Misconceptions Regarding Reverse Mortgage Loans MYTH: I can be thrown out of my house FACT:Homeowners can stay in the home until they move out of the home permanently (sale, death, etc.) Please note that it is your responsibility to keep the property taxes and homowners insurance current on the property

  13. Myth vs. Fact (cont’d):Common Misconceptions Regarding Reverse Mortgage Loans MYTH: My heirs are or will be against it FACT:Experience demonstrates heirs, once educated on the loan product, are in favor of Reverse Mortgages as it allows the family member to live in their property without being a financial burden on the heirs

  14. Myth vs. Fact (cont’d):Common Misconceptions Regarding Reverse Mortgage Loans MYTH: I can owe more than my house is worth FACT:The loan balance will NEVER exceed the value of the home. Reverse Mortgages are classified as Non-Recourse which means the loan payoff can never exceed the value of the home.

  15. Myth vs. Fact (cont’d):Common Misconceptions Regarding Reverse Mortgage Loans MYTH: The children will lose their inheritance: FACT:Historically, most houses continue to appreciate over time. A high percentage of houses still have enough equity to pass down as inheritance – allowing them to sell or refinance the home

  16. Myth vs. Fact (cont’d):Common Misconceptions Regarding Reverse Mortgage Loans MYTH: The loan balance will exceed the property value: FACT:If for some reason the loan balance exceeds the value of the property the additional amount is “forgiven” and NOT responsible by the heirs

  17. Myth vs. Fact (cont’d):Common Misconceptions Regarding Reverse Mortgage Loans MYTH: Reverse Mortgage loan proceeds/income will affect my Medicare/social security income: FACT:Loan proceeds DO NOT affect Social Security or Medicare benefits. It is your “tax-free” money to spend as you please. Medicaid: Please consult your tax advisor should you have any questions regarding Medicaid benefits.

  18. Myth vs. Fact (cont’d):Common Misconceptions Regarding Reverse Mortgage Loans MYTH: The costs of a Reverse Mortgage are too high: FACT:Compared to other mortgage loans, in many instances the benefits will outweigh the costs with the members’ ability to finance all closing costs (no out-of-pocket expense). The major benefit of a Reverse Mortgage is NOT having a monthly mortgage payment, as long as the property is occupied as a primary residence. In the long term, keeping the Reverse Mortgage for the member’s life, the costs are comparable to regular mortgage loans.

  19. The Potential & Growing Market • 21+ million senior homeowners (62+ years old) • 60% of the housing market is 65 - 70 years old • 85% of these seniors want to remain in their homes (AARP study) • $3 trillion in home equity available and growing • Loan volume has increased by 70% per year for the past two years • Studies show 93% satisfaction rate with Reverse Mortgages

  20. Member’s Responsibility • Keep real estate taxes current • Maintain homeowners insurance • Maintain property in good condition • Use home as primary residence

  21. Products Available • FHA/HUD Insured “HECM” (Home Equity Conversion Mortgage). • Home value limit = $362,790 • Fannie Mae HomeKeeper. • Home value limit = $417,000 • Cash Account Advantage. • Virtually NO home value limit • Equity choice feature available for credit line or cash-out option. * Not all products available in all states ** 2006 loan limits shown

  22. Reverse Mortgage Program Contact: For more information please contact our Reverse Mortgage Specialist: Rob Treadway Toll Free: 800-231-8855 Ext. 128 Local: 703-425-1204 Ext. 128 RTreadway@CUmortgage.net www.CUmortgage.net

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