Our Reverse Mortgage Rates Are Low & Our Process is Quick & Painless
A reverse mortgage is a loan for seniors age 62 and older. HECM reverse mortgage loans are insured by the Federal Housing Administration (FHA) and allow homeowners to convert their home equity into cash with no monthly mortgage payments.
We’re here to make the reverse mortgage process a whole lot easier, with tools and expertise that will help guide you along the way, starting with our Reverse Mortgage Qualifier.
We’ll help you clearly see differences between reverse mortgage options, allowing you to choose the right one for you.
The Reverse Mortgage Process
Here’s how our reverse mortgage process works:
- Complete our simple Reverse Mortgage Qualifier
- Receive options based on your unique criteria and scenario
- Compare mortgage interest rates and terms
- Choose the offer that best fits your need
HECM Product Basics (continued)
- HECM benefit amount (Principal limit) is calculated using lesser of appraised value or FHA limit ($625,000), youngest borrower’s age and current interest rate.
- The older a borrower is, the higher their Principal limit.
- Reverse mortgage proceeds would be first used to pay off existing mortgage/liens.
- HECM must be in a first-lien position
- Proceeds are generally tax-free (see your tax advisor)
- NO monthly mortgage payments are required as long as the conditions of the loan are met.
- Interest accrues on the portion of the loan amount disbursed.
- In 2010, a consortium of lenders assembled to re-engineer the HECM loan program in an effort to address varying consumer needs.
- On October 4, 2010 the FHA launched a new product: The HECM Saver.
- Required up-front costs are greatly reduced as compared to HECM Standard-this may save the average reverse mortgage borrower thousands of dollars.
- Maximum amount of money (the principal limit) that can be borrowed is less than with a HECM Standard, but the lower up-front costs may make it an attractive option for many clients.
HECM Net Principal Limit
- Principal Limit minuss:
- Up-front mortgage insurance premium if applicable)
- Lender’s origination fee (if applicable)
- “Other” closing costs (appraisal, title insurance, etc.)
- Servicing fee set-aside (if applicable)
- Mortgage and other lien payoffs
HECM Proceeds: Payment Plan Options
- Tenure – Equal monthly payments as long as at least one borrower continues to occupy the property as a principal residence.
- Term – equal monthly payments for a fixed period of months.
- Line of Credit – unscheduled payments and in amounts of the borrower’s choosing until the line of credit is exhausted.
- Modified Tenure – combination of line of credit plus scheduled monthly payments for as long as the borrower remains in the home.
- Modified Term – combination of line of credit plus monthly payments a fixed period of months.
- Lump Sum – all loan proceeds are taken up front, usually to pay off a mortgage or other substantial debts.
HECM Products: A Marketplace Overview
- Adjustable-Rate HECM
- Rate is adjusted monthly
- Offered with a variety of margins
- Uses LIBOR index
- Used by borrowers requiring a line of credit or monthly disbursements
- Fixed-Rate HECM
- One rate for the life of the loan
- Lump Sum only
- Used by borrowers who are rate-sensitive or paying off a larger liens
Reverse Mortgage Facts
- The Bank will NOT take title to the property in exchange for lending money to the borrower
- There are NO required monthly mortgage payments, as long as the terms of the loan are met. Interest and FHA mortgage insurance premium (MIP) accrue on the portion of the loan amount disbursed.
- The homeowner remains responsible for the property taxes, homeowner’s insurance and maintenance on the home.
- Social Security and Medicare benefits generally will NOT be affected.
- Needs-based benefits, such as Medicaid and Supplemental Secuity Income (SSI), may be impacted. Borrowers should consult their personal adviser.
HECM Property Eligibility
- Eligible Properties
- Single family and Planned Unit Development (PUDs)
- Two-to-four unit dwellings, as long as one unit is the borrower’s primary residence.
- FHA-approved Condominiums
- Non-Eligible Properties
- Investment properties
- Vacation homes
- Properties with illegal accessories (e.g., units or mixed-use properties where more than 25% is used for non-residential purposes)
Retirement Planning Strategies
- Outliving Your Assets
- House Rich/Cash Poor
- Line of credit and Liquidity
- “Rightsizing” Your Next Home – HECM for Purchase
Consumer Protection – Mandatory Counseling
- HUD-approved counseling agencies have been established for all HECM borrowers with HUD-mandated curriculum and protocols
- HUD counseling rules are focused on anti-steering (e.g., lenders must provide approved counselor lists to consumers)
- Options other than a HECM
- Financial implications of a HECM
- Advantages and disadvantages of a HECM
- Alternatives and options regarding each payment plan
- Explanation of the typical costs required to obtain a loan
- Disclosure information