Presentation Topics
What is a reverse mortgage, how does it work?
How can it help me, what are some common uses?
What are the costs involved?
How am I protected?
Common Misconceptions
What are my next steps?
What is a Reverse Mortgage?
Enables homeowners age 62 and older to convert their home equity into income without having to sell the home or give up title
No required monthly mortgage payments to make while still in the home
Loan proceeds are tax-free and may be tax-deductible upon loan repayment*
Reverse mortgages are commonly used to payoff existing mortgages, eliminating the monthly payment obligation
How Can I Receive My Reverse Mortgage Loan Proceeds?
How Does a Reverse Mortgage Work?
Loan proceeds available to the borrower are based on two main factors:
Age of homeowner(s)
Value and location of home
Loan is repaid at permanent move out, and repayment never exceeds appraised value of the home
Amount repaid is principal, accrued interest and any financed costs
Reverse Mortgages are
Great Options for…
Seniors who do not have enough income to make regular mortgage payments
Seniors who do not wish to make mortgage payments, or would like to eliminate that monthly payment obligation
Seniors who could benefit from a stream of income during their retirement years
Seniors who are finding out that traditional retirement income sources (IRAs, pensions, 401(k)s, Social Security) aren’t sufficient to cover everyday living expenses and healthcare needs
What are the Typical Costs Involved?
Borrowers are responsible for closing costs
All closing costs can be funded directly through the loan
Closing costs are similar to those of any other mortgage loan
Typical Loan Closing Costs Include:
Appraisal
Title search and insurance
Recording fees and mortgage taxes
Other typical and customary closing costs
What are My Responsibilities?
Keep property taxes current
Keep Home Owners Insurance current
Maintain property in reasonable condition
How am I Protected?
Reverse Mortgages are Non-Recourse loans (borrower can never owe more than the appraised value of the home at time of repayment)
Advance Loan Disclosures and Loan Illustrations are provided at time of application
Counseling is required for all Reverse Mortgage Applicants – provided by HUD, AARP and other reputable organizations
Most Common Reverse Mortgage Misconceptions
"I can be thrown out of my house" or "The Lender will take my home"
False
, homeowner can stay in home until a loan maturing event occurs
Homeowners retain title to the home throughout the loan
"I can owe more than my home is worth"
False
, homeowner can never owe more than the appraised value of the home at the time the loan is paid off.
"My heirs will be against it"
False
, experience demonstrates many heirs are generally in favor of Reverse Mortgages, and there are compelling estate planning values to these loans
Reverse Mortgages and
Home Equity
Common Questions and Answers
Question: "Are borrowers limited on how they can use the money they receive from a reverse mortgage?"
Answer:
No, the money can be used in any way they like. Common uses are home modifications, healthcare, paying off existing mortgages and supplemental income.
Question: "How much money will be owed when the loan has to be repaid?"
Answer:
The total amount borrowed, which includes any accumulated interest, mortgage insurance premiums, financed origination fees and closing costs will be owed at time of repayment.
Common Questions and Answers
Question: "When does the loan have to be repaid?"
Answer:
If all borrowers move out of the home for more than 12 consecutive months, sells the home or all borrowers on title passes away, the loan must be paid off.
Question: "Is it required that borrower receive counseling before getting a reverse mortgage?"
Answer: Yes, counseling is required to ensure borrowers are receiving correct information about reverse mortgages. Counselors will review loan programs, costs and alternative solutions with potential borrowers.
