The daughter of a potential client of mine asked me today to send her "something that summaries the features and benefits of all of these different reverse mortgage programs". When I finished simplifying and summarizing to send it to her, I thought this would be good to share. So here it is.
I've listed the features below... and the benefits? Increased cash flow and access to funds & all that may bring to the quality of life.
- Live in the home.
- Maintain the home.
- Keep the home insured.
- Keep property taxes and property owners association dues current.
- No mortgage payments.
- No minimum credit score requirements.
- No income requirement.*
- Non-recourse Loan - Borrower & Heirs protected - Borrower or Estate are not responsible to pay any shortage if home is sold at market value for less than loan balance.
- Loan proceeds are not taxable income.
- No prepayment penalties.
- Up-front Mortgage Insurance Premium
- Monthly Mortgage Insurance of 1.25% of loan amount per annum, accrued monthly.
- Due & payable when the last borrower no longer lives permanently in the home
*Sufficient income to cover the costs of property taxes and hazard insurance are required when obtaining a HECM for Purchase.
- Interest rate is based upon the 1 Mo. LIBOR rate (1MLB)
- Interest rate adjusts monthly.
- Interest rate is capped at 10% over the initial rate.
- FHA Insurance protects the borrower by guaranteeing continuing payments (term or tenure) and credit line availability, including growtheven if lender fails.
- Ability to receive loan proceeds in various ways.
- Tenure (monthly payments for life while in home)
- Term (monthly payments for specific time period)
- Line of Credit with a guaranteed growth rate**
- Lump sum
- Combination of any or all of the above
- Ability to change style of payout even after closing for a $20 recalculation fee)
**Growth rate on Line of Credit is equal to the note rate plus 1.25%, and not dependent upon future home value or income or loan balance.
- Higher loan amount available. (At this time)
- May only receive funds as lump sum.
- Accurate prediction of future balance.
- Highest Loan amounts.
- Up-front Mortgage Insurance Premium is 2% of Home Value.
- Lower Loan amounts (means lower risk for investor)
- Lower Up-front Mortgage Insurance Premium .01% of Home Value
Did I miss anything??
By Deborah Nance
Your Local Southern California Reverse Mortgage Professional
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iReverse Home Loans, LLC, NMLS#810502 originates reverse mortgages in Alabama, Alaska, Arizona (MB-0919584), California, Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon (ML-5378), Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont (1164-MB), Virginia, Washington and Wisconsin.
Important Information: Reverse Mortgages are neither "endorsed" nor "approved" by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. The owner(s) retain title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts or failure to maintain the condition of your property may cause the reverse mortgage loan to become due immediately. A reverse mortgage is a complex loan secured by your home. Whether such mortgage makes sense for you depends on your financial situation and needs. For these reasons, we strongly recommend that you consult with a qualified independent housing counselor, family members and other trusted advisers before making this decision. This website is not from HUD or FHA and was not approved by HUD or any government agency.