Reverse Mortgage Information

Reverse Mortgage - Aging In Place Planning

Mon, 08 Mar 2010 19:45:42 -0600

Hi all,

Just wanted to tell you a quick story about a client I met with today that we will be helping with a reverse mortgage very soon. She was referred to me by a friend of mine.

She is 83 years old and lives alone. She is active, healthy and vibrant!
Her home is worth $400,000.
She has a small mortgage for $36,000 with a $367 monthly payment.
Her social security is $600 per month.

With her reverse mortgage she is planning on:

The reverse mortgage will payoff her existing loan, saving her $367 per month in payments!
She will take $20,000 cash to upgrade her master bath and install a safe, walk in tub & shower system!
She will leave $135,000 in a line of credit to have for emergencies and in home care should something happen in the future. (Smart woman!)
She will receive $500 per month tenure payment from us to her for the rest of her life as long as she lives in the home.

Now she will be able to age in place, with an increase in income, a safer home, and money to pay for care when she may need it.

Now you know why I love my job! It is so heartwarming to be able to help a senior be safe and secure in their home.

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Reverse Mortgage Facts, FAQ's and Fax

Mon, 01 Mar 2010 00:18:26 -0600

There are many places to go to find out the facts on Reverse Mortgages. Websites sponsored by HUD, NRMLA and AARP all give plenty of information. I provide links to all of them on my blog.

Facts:

The most popular reverse mortgage loan is the FHA HECM (Home Equity Conversion Mortgage). The HECM comes in two flavors, fixed and adjustable.
Reverse mortgages may now be used to purchase a home.
All borrowers must be at least 62 years old and on title to the home.
The home must be the borrower's primary residence.
There are no required monthly payments on a reverse mortgage.
It is a negatively amortizing loan.
The loan to value (LTV) amounts are based upon a combination of age, home value and expected interest rates.
There are no prepayment penalties.
MIP is financed both as an upfront cost and at .5% per annum accrued monthly. (Just like traditional forward FHA loans).

FAQ's: (Taken from HUD's website)

1. What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. FHA's HECM provides these benefits. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

2. Can I qualify for FHA's HECM reverse mortgage?

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home. You are further required to receive consumer information from an approved HECM counselor prior to obtaining the loan. You can contact the Housing Counseling Clearinghouse on (800) 569-4287 for the name and telephone number of a HUD-approved counseling agency and a list of FHA-approved lenders within your area.

3. Can I apply if I didn't buy my present house with FHA mortgage insurance?

Yes. It doesn't matter if you didn't buy it with an FHA-insured mortgage. Your new FHA HECM will be FHA-insured.

4. What types of homes are eligible?

To be eligible for the FHA HECM, your home must be a single family home or a 1-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.

5. What's the difference between a reverse mortgage and a bank home equity loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes, insurance and other conventional payments like utilities. With an FHA HECM you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

6. Can the lender take my home away if I outlive the loan?

No. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than the value of your home at the time you or your heirs sell the home.

7. Will I still have an estate that I can leave to my heirs?

When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs.

8. How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

9. Should I use an estate planning service to find a reverse mortgage?

FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. FHA provides this information free, and HUD-approved housing counseling agencies are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders. Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you.

10. How do I receive my payments?

You have five options:

Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term - equal monthly payments for a fixed period of months selected.
Line of Credit - unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.
Modified Tenure - combination of line of credit with monthly payments for as long as you remain in the home.
Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

FAX - For a free 27 page Reverse Mortgage Guide please email me your Fax Number and I will send it to you!

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Can I Refinance Out of a Reverse Mortgage?

Tue, 26 Jan 2010 10:37:29 -0600

I love talking with my clients, prospects and closed clients alike. They are my inspiration for most of the posts on my blog.

Yesterday, I was speaking with Jerry, a client who currently has a reverse mortgage. He was interested in refinancing out of his reverse mortgage into a 30 year fixed rate "forward" mortgage in order to maintain plenty of equity in his home to leave to his children. He has a great income, excellent credit and plenty of equity and should easily qualify for a conventional loan.

"Why don't you just make payments on the reverse mortgage?" I asked.

"Can you do that?"

"You sure can!" I replied. "And let me tell you why I think that would be the best idea for you." I went on to explain the following to him.

The current rate on your adjustable reverse is at a 1.25% margin over the One Month T-Bill (A HECM CMT 125 in reverse speak.) One of the lowest margins ever offered on the HECM.

By making payments on the reverse mortgage you will not only eliminate or slow down the current principal balance increases, you increase the available line of credit. This feature is only available on the FHA Adjustable Rate Reverse product.
You avoid the cost of refinancing.
Payments on a 30 year fixed are mostly interest during the first half of the loan life, so basically the bank is now making @5.5% on the loan instead of the current less than 2%. This reduces the amount of principal reduction you would see from the same monthly payment.
In the event the interest does adjust upwards,( and yes, everyone agrees that is bound to happen) you will have lowered your principal balance more than if you had refinanced AND.... Ready??? Here comes the best part! The growth feature on your line of credit is directly tied to the interest rate being paid on your loan (plus .5%)! That means that should you need to access equity in the future, due to an emergency of any kind, you will have more funds available to you when you need it.
There is never a prepayment penalty on n FHA Reverse Mortgage, and yes, you can refinance at anytime, but carefully weigh the benefits of other options before you spend your hard earned equity.

Needless, to say, although I talked Jerry out of what would be an easy refinance for one of my forward team mates, I helped him to accomplish his goal of reducing his debt in order to leave more for his children AND be prepared for whatever the future may bring.

As always, I love to hear your thoughts, comments and especially differing points of view. Please let me know what you think.

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

What Happens When a Reverse Mortgage Loan is Upside Down?

Wed, 20 Jan 2010 19:00:45 -0600

I have posted on this topic before, and recently have had more questions and visits from seniors who are concerned about their reverse mortgage balances being higher than their home's current value.

I want to go into a bit of detail, but before I do here's the answer in a nutshell:

As long as the borrower is living in the home, paying taxes and insurance and maintaing the home in good condition, there is nothing to worry about. So please, do not lose any more sleep over this or don't let your loved ones lose any sleep. All is well.

Is this a bad thing?
Is the lender going to call the loan?
What about my line of credit?
Can I sell my home?
Will my children have to pay the difference when they inherit?

Here's the answers:

1. It's never fun to owe more than your home is worth, but you should know that an FHA Insured reverse mortgage is a non recourse loan. In fact all of the Jumbo Reverse Mortgages that I've ever dealt with are also "non-recourse" loans. Non recourse means there is no "personal" liability for the borrower. If the lender takes a loss on the loan, they cannot obtain a judgment or lien against the borrower.

2. As long as the senior homeowner occupies the home as their principal residence, pays insurance and taxes, and maintains the home in good condition the loan is not in default.

3. If you have an available balance in the line of credit for your reverse mortgage, it is available to you to withdraw. Even if the home value has exceeded your loan balance! That is not true for traditional HELOCs (nice feature for seniors, I wish they had it for me...)

4. Yes, you can sell your home. Anytime. But if it will be a short sale you will need to work with the lender. They will want to have an appraisal so that you don't "dump" the house and the sale will need to be an arm's length transaction.

5. Nope, the kids are fine. If you pass away with a reverse mortgage and the loan balance is higher than the value, your estate will need to payoff the loan. If there is no equity left, or the home is "upside down" the estate will most likely allow the home to go into foreclosure (which takes a minimum of 6 months on a reverse) and the lender will then sell the home and any loss will wind up being a claim for the lender to FHA.

Note- If the family inherits the home, and the loan is upside down, the family cannot purchase the home for the current value. Just as it is in the regular mortgage world any short sales must be "arm's length" transactions.

I hope that I have alleviated some fears and if you know of a senior who is losing sleep over their reverse mortgage or worred about whether or not getting a reverse is the right thing to do. Please direct them to my activerain blog or my linked outside blog, www.coronareverse.com where they can find links to lots of free and interesting information without any pressure.

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Reverse Mortgage - What is it exactly?

Thu, 10 Dec 2009 09:20:12 -0600

Reverse Mortgages are a type of home loan. Most reverse mortgages are a HUD/FHA insured home loan that allows you to liquidate some of your equity in order to payoff existing mortgages as well as generate additional cash flow. They are called HECM Loans. HECM stands for Home Equity Conversion Mortgage.

There are 3 types of HECM Loans.

Adjustable Rate HECM (the original FHA Reverse Mortgage!)
Fixed Rate HECM
HECM For Purchase (either Fixed or Adjustable)

Reverse Mortgages are regulated and insured by the Federal Housing Administration (FHA). By law, you can never be forced to sell your home of move. You will always retain the title to your home, and you can still leave your home to your children or whoever you choose. There is almost no risk of losing your home. The homeowners obligations are threefold:

Live in the home as your Primary Residence (at least one spouse must live in the home)
Keep the home insured and property taxes current.
Keep the home in good condition.

Who Qualifies?

Senior Homeowners with enough equity, over the age of 62.
Most 1 to 4 family Residences qualify.
FHA Approved Condominiums
Post 1976 Manufactured Homes on their own lots.*

Some of the best features of an FHA Reverse Mortgage are the methods that you can access the equity in your home!

Lump Sum - Take all the money you are entitle to in cash/direct deposit at the close of escrow.
Tenure Payments* - Monthly payments to the homeowner for as long as they live in the home!
Credit Line* - Leave the funds in a line of credit (that has a guaranteed growth feature!) to be accessed as you need it.
* Both the Tenure and Credit Line Options are not available on the Fixed Rate Reverse Mortgage.
Any combination of the options listed above.

As with all other FHA Home Loans, a reverse mortgage is a "Non Recourse" loan. This means that the lenders only security for repayment of the loan is the home itself. The lender has no rights to lien any other assets of the borrower or their estate. Only the home itself can be used as the lenders recourse to a foreclosure. If the home is worth less than the outstanding balance of the reverse mortgage then the lender must go to FHA for reimbursement of any loss. The loss will not generate any judgements or liens against the borrower or their heirs.

To see if you or your clients may benefit from a reverse mortgage please email me the following information. I will not call you unless you ask me to and provide your number, but in order to get you a decent estimate I need the following information.

Birthdays of all persons on title to the home.
Home Value. (if you provide your address I can do a value check for you)
Current Home Loan and Equity Loans on the property.
Zip Code

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Selling my home - planning is key.

Sun, 29 Nov 2009 12:43:51 -0600

Recently I listed and sold my home. My agents (my sister and nephew) came to the listing appointment with more than just forms. They had a plan. Beth was all about the "time line" and guided us on paper from preparing for the open house, to reviewing offers, to packing and moving - she drew it all out for us. Each of us knew who was responsible for doing what and when.

By creating a detailed marketing plan, action list and time line we created the future we wanted. Beth even predicted the final sales price within less than 1%! With clear instructions we were calm, educated sellers and knew exactly what was expected of us.

I'm recomennding the written timeline and action plan to all listing agents so that their sellers too will feel confident and clearly know what is expected of them; and what they can expect from their realtors.

I know, it seems like such a simple thing, but in this world where everyone is an expert, many just wing it cause they know they can handle the glitches. I say, "Make a plan, execute it, and AVOID the glitches" Sounds like a sure way to get referrals and a great reputation. That's got to be good for business.

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Free Upcoming Classes to Educate Troubled Homeowners!

Sat, 21 Nov 2009 01:02:19 -0600

Save these dates! Let your friends, neighbors, coworkers and family know that if they have questions about their home and the process of foreclosure, loan modifications, short sales, and deed in lieu of foreclosure that they need to be at this seminar. This free 90 minute presentation is a great first step to understanding where to go for help. Presented by HELP "Homeowner Education Learning Program" a non-profit agency, this seminar will educate troubled homeowners about the options available to them. Knowledge is power.

HELP USA Also provides professionals within real estate and related fields an excellent 2 day class that will certify them as "HELP Certified Professionals" I recommend going to the homeowners free seminar first. There you will get fired up to become an educated, top notch professional. Please click on my link to HELP on the right side of this page.

FREE HOMEOWNER SEMINAR SCHEDULE

December 7th, 2009
6:30pm-9:30pm
Moreno Valley Senior Center
25075 Fir Avenue
Moreno Valley, CA

December 9th, 2009
5:30pm-8:30pm
Temecula Public Library
30600 Pauba Road
Temecula, CA 92592

90 Minute Seminar Agenda

Topic: Can, or Should I keep My Home?
Introduction:

-Panel Members, present and not. Web Site resources and introduction to blog.
-What happened? In brief, how did we get here?
-Prediction of the market in general.
-Time frames for foreclosure process / Why the banks don't foreclose? / Should I stay if I'm not making my payments?
-Try To Modify, If To No Avail, Short Sale! Never Walk Away.
-Credit damage and when will I be able to buy again? Take action early!
-Modify? Short Sale? Foreclose? Understanding why each situation is unique. One size does not fit all.
-Why is it better to cooperate with a Short Sale than to just let the bank foreclose?

Statistical Data:

-Power Point presentation providing current data to help clarify what is happening in the region by the numbers.

Modifications:

-What's legal and what's not.
-Who's legally set up with The Department of Real Estate.
-What you must know to avoid being a victim.
-Why are we hearing stories of great success when I've been waiting for months?
-What is the Banks motivation?

Taxes:

-What is Prop-8?
-I paid 300k but I'm paying taxes based on 450k, why?
-What if I can't pay my property taxes?
-What are the potential tax consequences under a short sale, foreclosure, forbearance, modification, etc.
-What is the difference between what the Franchise Tax Board is doing and the IRS?
-What exactly is debt relief? Does the lender have to give me a 1099 for said relief?
-Can I file bankruptcy against these future taxes?

Q&A:

*Please note-All information is deemed reliable and was researched prior to this presentation. The presenters are expressing their opinions only and are not offering any legal advice. The County of Riverside is not endorsing any company or individual. All attendees are encouraged to seek individual advice structured around their own unique circumstances.

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Reverse Mortgages - Information Straight from HUD's Website

Sun, 15 Nov 2009 20:36:01 -0600

http://www.hud.gov/offices/hsg/sfh/hecm/hecmabou.cfm

FHA Reverse Mortgages
(HECMs) for Consumers

The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which enables you to withdraw some of the equity in your home. You choose how you want to withdraw your funds, whether in a fixed monthly amount or a line of credit or a combination of both.

You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

HECM counselors will discuss program eligibility requirements, financial implications and alternatives to obtaining a HECM. They will also discuss provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, you should be able to make an independent, informed decision of whether this product will meet your needs. You can search online for a HECM counselor.

You can use a reverse mortgage calculator to help you see if you qualify. If you meet the eligibility criteria, you can complete a reverse mortgage application by contacting a FHA-approved lender.

Borrower Requirements

You must:

Be 62 years of age or older
Own the property outright or have a small mortgage balance
Occupy the property as your principal residence
Not be delinquent on any federal debt
Participate in a consumer information session given by an approved HECM counselor

Mortgage Amount Based On

Age of the youngest borrower
Current interest rate
Lesser of appraised value or the HECM FHA mortgage limit

Financial Requirements

No income or credit qualifications are required of the borrower
No repayment as long as the property is your principal residence
Closing costs may be financed in the mortgage

Property Requirements

The following eligible property types must meet all FHA property standards and flood requirements:

Single family home or 1-4 unit home with one unit occupied by the borrower
HUD-approved condominium
Manufactured home that meets FHA requirements

How the Program Works

If you are a homeowner age 62 or older and have paid off your mortgage or have only a small mortgage balance remaining, and are currently living in the home, you are eligible to participate in FHA's reverse mortgage program. The program allows you to borrow against the equity in your home. You can select from five payment plans:

Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term - equal monthly payments for a fixed period of months selected.
Line of Credit - unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.
Modified Tenure - combination of line of credit plus scheduled monthly payments for as long as you remain in the home.
Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

You can change your payment options for a fee of $20.

Unlike ordinary home equity loans, a FHA reverse mortgage HECM does not require repayment as long as the home is your principal residence. Lenders recover their principal, plus interest, when the home is sold. The remaining value of the home goes to you or your heirs. You can never owe more than your home's value.

If the sales proceeds are insufficient to pay the amount owed, FHA will pay the lender the amount of the shortfall. FHA collects an insurance premium from all borrowers to provide this coverage.

The amount you can borrow depends on your age, the current interest rate, other loan fees, and the appraised value of your home or FHA's HECM mortgage limit for your area, whichever is less. Generally, the more valuable your home is, the older you are, and the lower the interest, the more you can borrow. If there is more than one owner, the age of the youngest owner is used to determine the amount you can borrow. For an estimate of HECM cash benefits based on your age, home value, and current interest rate, go to the online calculator.

There are no asset or income limitations in order for you to be eligible for a HECM. In addition, there is no limit on the value of homes qualifying for a HECM. The value of your home will be determined by an appraisal. However, the amount that you may borrow is derived from the lower of the appraised value or the FHA HECM mortgage limit of $625,500. You are charged an upfront insurance premium of 2 percent of the maximum claim amount that may be borrowed plus a 0.5 percent annual premium.

HECM Costs

You can pay for most of the costs of a HECM by financing them and having them paid from the proceeds of the loan. Financing the costs means that you do not have to pay for them out of your pocket. On the other hand, financing the costs reduces the net loan amount available to you.

The HECM loan includes several fees, including an origination fee, closing costs, mortgage insurance premium, interest and servicing fees.

You will pay an origination fee to compensate the lender for processing your HECM loan. A lender can charge a HECM origination fee up to $2,500 if your home is valued at less than $125,000. If your home is valued at more than $125,000 lenders can charge 2% of the first $200,000 of your home's value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000.

Closing Costs

Closing costs from third parties can include an appraisal, title search and insurance, surveys, inspections, recording fees, mortgage taxes, credit checks and other fees.

Mortgage Insurance Premium (MIP)

You will incur a cost for HECM insurance. You can finance the mortgage insurance premium (MIP) as part of your loan. You will be charged an upfront MIP at closing which will be 2% of the lesser of your home's value or the FHA HECM mortgage limit for your area. You will also be charged a monthly MIP that equals 0.5% of the mortgage balance.

The HECM insurance guarantees that you will receive expected loan advances and that you will not have to repay the loan for as long as you live in your home. The insurance also guarantees that, if you or your heirs sell your home to repay the loan, your total debt can never be greater than the value of your home.

Servicing Fee

Lenders or their agents provide servicing throughout the life of the HECM. Servicing includes sending you account statements, disbursing loan proceeds and making certain that you keep up with loan requirements such as paying taxes and insurance. HECM lenders may charge a monthly servicing fee of no more than $30 if the loan has an annually adjusting interest rate and $35 if the interest rate adjusts monthly. At loan origination, HECM lenders set aside the servicing fee and deduct the fee from your available funds. Each month the monthly servicing fee is added to your loan balance.

Interest Rate

HECM borrowers can choose an adjustable interest rate or a fixed rate. If you choose an adjustable interest rate, you may choose to have the interest rate adjust monthly or annually. Lenders may not adjust annually adjusted HECMs by more than 2 percentage points per year and not by more than 5 total percentage points over the life of the loan. FHA does not require interest rate caps on monthly adjusted HECMs.

Repaying a HECM

A HECM loan must be repaid in full when you die or sell the home. The loan also becomes due and payable if:

You do not pay property taxes or hazard insurance or violate other obligations.
You permanently move to a new principal residence.
You, or the last borrower, fail to live in the home for 12 months in a row. An example of this situation would be if you (or the last borrower) were to have a 12-month or longer stay in a nursing home.
You allow the property to deteriorate and do not make necessary repairs.

Origination Fee

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Seniors 62 & Better Can Finance a New Home with A Reverse Mortgage.

Fri, 06 Nov 2009 14:00:07 -0600

HECM - Home Equity Conversion Mortgage) We pronounce it "Heckum"

FHA defines "HECM for Purchase" as a real estate purchase where title to the property is transferred to the HECM borrower, which the borrower will occupy as a principal residence, and, at the time of closing, the HECM first and second liens will be the only liens against the property.

There are 3 Major Benefits To Senior Homebuyers

Gives homebuyers who are downsizing more purchasing power than if they had to pay all cash
Designed to allow your seniors to purchase a new principal residence and obtain a Reverse Mortgage within a single transaction by eliminating the need for a second closing.
Buyers do not have to "qualify" for monthly payments on the new purchase transaction. A significant detail to senior homebuyers on a fixed income.

Other Benefits to Senior Homebuyers

Eliminates Monthly Mortgage Payments
Borrower Maintains The Title
Loan Is Non-Recourse
Remaining Equity Goes To Borrower Or Borrower's Heirs, Not The Bank
No Pre-Payment Penalty
FHA-Insured
Usually No Income Verification Or Credit Score Requirement (If buyer is retaining their former home as rental property there are income requirements)

* Certain transactions will require "qualification" - ask your Reverse Mortgage Specialist for specific details.

An Example - Bob and Betty Buyer are purchasing a single story home and selling their two story family home.

Bob is 76 and Betty is 75
The clients' proceeds on their existing home after all expenses will be approximately $152,000.00
With $152,000 to put into a new home and a HECM loan the clients have the purchasing power to obtain a home valued at up to $350,000 with no monthly mortgage payments - EVER!

I am happy to provide training and expertise to you on the HECM For Purchase. Please email me or contact me through the links on this blog. The training class is 1 hour in length and makes for a fun, learning experience to prepare you for this next great step in your life.

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

What to Do About the Economy? Patronize Small Businesses & Donate/Volunteer for Local Charities

Wed, 04 Nov 2009 10:58:38 -0600

I've been reading posts, listening to the news and the talking heads and I have an idea. Not an original one to be sure. But one worth posting.

Small business seems to have been completely left out of any economic stimulus, with the government figuring that all their printed dollars used to bail out Wall Street and Auto Manufacturing will somehow filter down to small business. I'm no economist and I hope that some of that money does... but I know that there is something I can do personally and I am challenging each of us to do the same.

Patronize a small business in your community TODAY. Make it your goal to do business with small, professionally run businesses. Alternatively or in addition, give/donate to a local charity who can help our local troubled neighbors to get through this tough time.

I'm thinking of all I have to do today and how I can use my neighborhood businesses to get it done. I'll have to buy more moving boxes. Check. I need a hostess gift. Check. My car needs an oil change and a wash. Check.

What are you going to do? Please post it! Or better yet - post what you've done to help your community small businesses tonight after your done.

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Snapshot of a Reverse Mortgage

Mon, 02 Nov 2009 22:47:26 -0600

What Is Reverse Mortgage? (edit/delete)

There are 3 types of HECM Loans.

Adjustable Rate HECM (the original FHA Reverse Mortgage!)
Fixed Rate HECM
HECM For Purchase (either Fixed or Adjustable)

Reverse Mortgages are regulated and insured by the Federal Housing Administration (FHA). By law, you can never be forced to sell your home or move. You will always retain the title to your home, and you can still leave your home to your children or whoever you choose. You will never have to make a monthly mortgage payment (although you can if you wish!). Even if your reverse mortgage balance should outgrow the value of your home, a payment is never due. In fact, there is almost no risk of losing your home if you will always do the following:

Live in the home as your Primary Residence (at least one spouse must live in the home)
Keep the home insured and property taxes current.
Keep the home in good condition.

Who Qualifies?

Senior Homeowners with enough equity, over the age of 62.
Most 1 to 4 family Residences qualify.
FHA Approved Condominiums
Post 1976 Manufactured Homes on their own lots.*

Some of the best features of an FHA Reverse Mortgage are the methods that you can access the equity in your home!

Lump Sum - Take all the money you are entitle to in cash/direct deposit at the close of escrow.
Tenure Payments* - Monthly payments to the homeowner for as long as they live in the home!
Credit Line* - Leave the funds in a line of credit (that has a guaranteed growth feature!) to be accessed as you need it - Even if you have run out of equity and are upside down.
* Both the Tenure and Credit Line Options are not available on the Fixed Rate Reverse Mortgage.
Any combination of the options listed above.

Birthdays of all persons on title to the home.
Home Value. (if you provide your address I can do a value check for you)
Current Home Loan and Equity Loans on the property.
Zip Code

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

12 Terrific Things to Do in Riverside California

Sun, 01 Nov 2009 17:13:22 -0600

When all the relatives show up for the holidays this year, I'll be ready with lots of fun things to do!

Via Vicki Pedersen - Riverside and Corona CA Realtor (Pedersen Real Estate):

Here is a list of some of my favorite things to do in Riverside California.

Artswalk
On the first Thursday of every month, 17 locations in downtown Riverside are open to the public from 6 – 9 p.m. Participating institutions host art openings, performances, tours, talks and more. Start at any location. This event is free.

Benedict Castle
Benedict Castle, a Medieval-Spanish structure with strong Moorish influences, was built in two stages between 1921 and 1931 as a luxurious home for Charles W. Benedict. The castle and grounds have been painstakingly restored. The Castle is located at 5445 Chicago Avenue. For more information on booking a tour visit www.benedictcastle.com .

California Citrus State Historic Park
The design of the park is reminiscent of a 1900s city park, complete with an activity center, interpretive structure, amphitheater, picnic area and demonstration groves. The land contained within the park still continues to produce high-quality fruits. The park recaptures the time when “Citrus was King” in California, highlighting the importance of the citrus industry in Southern California. The park is located at 9400 Dufferin Avenue (Van Buren). For more information about the park and special events call (951) 780-6222 ext.13.

Downtown Farmers Market
Every Saturday on Main Street between 5th and 6th Streets from 8 a.m. - 1 p.m. vendors offer organic fruits and vegetables, fresh-cut flowers, specialty items such as breads, hummus and homemade honey, fish, cheese and much more! For more information call (951) 826-2370.

Family Fun Days on First Sundays
On the first Sunday of every month October to May, six locations in downtown Riverside are open to the public from 1 – 4 p.m. Participating institutions including the Mission Inn Museum, UCR /California Museum of Photography, UCR /Sweeney Art Gallery, Riverside Metropolitan Museum, Riverside Public Library and Riverside Art Museum, host free hands-on activities for families.

Festival of Lights
The City of Riverside and the Mission Inn present the Annual Riverside Festival
of Lights. This free event kicks-off with the Switchon Ceremony the day after Thanksgiving and runs through early January. Visitors can enjoy outdoor ice skating, carriage rides, free holiday entertainment, unique shopping and dining in the downtown, holiday food and specialty vendors. Free parking weekdays after 5 p.m. and weekends. For more information visit their website.

Heritage House
This 1891 Victorian showplace depicts life in turn-of the century Riverside. An elegant reminder of the affluent homes which once graced Magnolia Avenue. It is open Fridays noon - 3 p.m. and Sat-Sun noon - 3:30 p.m. Closed July and August. Suggested donation of $3 for adults and $1for children and seniors. Heritage House is located at 8193 Magnolia Avenue. For more visit their website.

March Field Air Museum
Located next to the March Air Reserve Base off Interstate 215 at Van Buren Boulevard. The Museum serves as home to over 70 historic aircraft and displays over 2,000 artifacts. The March Field Air Museum commemorates the achievements of our military and civilian aviators; provides educational resources and programs; promotes public awareness of past, present and future air and space technologies; and depicts the history of the March Field Air Base. Open Tuesday – Sunday from 9 a.m. – 4 p.m. Admission is $8 general and $5 for ages 5-11. For more information visit their website at http://www.marchfield.org/.

Mission Inn Tours
Take a 75-minute tour of Riverside's historic Mission Inn on the art, architecture and history of the Mission Inn. This provides an opportunity to see parts of the Inn that are inaccessible to the general public. The regular cost is $12 for adults and senior citizens, children under twelve free with an adult. $1 AAA discount. During Festival of Lights (11/28 to 01/04) the cost is $15 per person. Call the museum at (951)788-9556 during regular business hours for available tour times and reservations.

Mount Rubidoux
Mount Rubidoux is a mountain close to downtown Riverside. There is a hiking trail to the summit. The trails is 3 miles long and climbs in elevation 500 feet. Other than the great views from the top, you can find the Serra Cross in honor of the founder of the mission,Fray Junipero Serra and the Tower of World Peace. Mt. Rubidoux Blvd and 9th street. There is no cost.

Riverside Metropolitan Museum
Located at 3580 Mission Inn Avenue, this is a center for learning as well as a community museum that collects, exhibits and interprets cultural and natural history. The Museum’s collections consist of over 75,000 objects, which include anthropology, natural history and history. The Museum also offers educational programs, workshops, demonstrations and lectures. For more information on current and upcoming exhibitions visit http://www.riversideca.gov/museum/

University of California, Riverside Botanic Gardens
Located at 900 University Avenue, 40 acres of botanical gardens containing more than 3,500 plant species from around the world. This wealth of vegetation creates a hospitable sanctuary for wildlife, where nearly 200 bird species have been officially observed. Open daily from 8 a.m. to 5 p.m. Admission is a $1 suggested donation and there is limited parking by the entrance. For more information, visit http://www.gardens.ucr.edu/.

If you would like to learn more about real estate in Riverside CA, contact me at vicki@pedersen-team.com Click here to visit my website.

Written and posted by: Vicki Pedersen, ABR, Pedersen Real Estate, Riverside/Corona, California, DRE# 01435715 -- Phone: 951-840-5212 vicki@pedersen-team.com

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

HELP! The Balance on My Reverse Mortgage is Higher Than My Home Value. What Do I Do?

Sat, 31 Oct 2009 11:50:26 -0500

Thursday evening, October 29, I attended a meeting for the California 62^nd Assembly District on Economic Recovery. I was a volunteer for the HELP - Homeownership Education Learning Program booth, giving homeowners and homebuyers information about free classes put on by the organization.

While I was there a distinguished older gentleman came to our table. I asked him how he was doing with his home loan. With a glum look on his face and a soft voice, he said, "I don't think you can help me, I have a reverse mortgage."

I answered, "I'm sure I can help you, because reverse mortgages are my expertise! Tell me about your loan."

"I got it a couple of years ago when my home was worth a lot more than it is now. I can't sleep at night because the balance is higher than what the house is worth and I don't know what they are going to do. Will they take the house from me? I keep getting mail telling me I better do a loan modification or refinance before the rate resets and they say my mortgage is $425,000,00!! I've never had a mortgage for that amount! There must be a mistake on my credit report. I don't know what to do, can you help me?"

I took his hand and said to him. "I think I can put your mind at ease."

I proceeded to give him a quick lesson in the mechanics (blessings) of a reverse mortgage. I explained to him that no matter how high the balance of the loan became, he would never be required to make payments and it would never be foreclosed on if he did four things:

Paid his property taxes. (He had)
Kept the home insured. (It was)
Maintained the home. "Of course!" he said.
Lived in the home. "Where else would I live?"

Then I asked him if he knew whether or not he had a line of credit on his reverse mortgage, and he told me that according to his statement there was a line of credit of about ten thousand dollars. That was good news and I shared with him that no matter what happened to the home value that his line of credit was secure, insured by FHA to be available to him when he needed to take the money. (Note: Traditional HELOC's will lower, freeze or cut off lines of credit when value or borrower credit declines - just when you need it most.) I explained that the ten thousand was a nice little cushion should he have any emergencies and that if he did not use it, the funds available to him would continue to GROW EVEN IF THE HOME VALUE CONTINUED TO DECLINE! What peace of mind for a senior.

I then explained to him that because he had received his reverse mortgage a few years ago the margin was likely very low, meaning his current interest rate was probably in the twos! He agreed that was true. I shared how with a low rate like that the balance would not grow as fast as with a higher rate and that there was a possibility in 4 or 5 years if home values came back up that he could actually be in an equity position again. But, even if that didn't happen he would never have to leave the home as long as he did the four things I had told him.

I also explained to him that on a reverse mortgage, because the lenders are obligated to make line of credit funds available with a growth factor, and because the balance grows over time, a formula was established for determining the principal amount shown on the recorded deeds of trust. That formula is 1.5 times the home value, or FHA lending limit, whichever is less. So, if his home had appraised for $284,000 a few years ago, the lender would have multiplied that amount by 1.5 to determine the figure posted to the deed of trust - $425,000.00 I shared with him that the balance owed on the loan could be more or less than that and that he should look to his monthly statement to see how much was owed. I joked with him that if he lived to 100 his loan balance could be even higher than the 425.

Then he learned from me that no matter the loan balance, when he sold (or passed away and the kids sold it), the MIP Insurance on the loan would insure that he would never have to pay any amounts owing over the sale proceeds, as long as it was an arm's length transaction. However, if there was equity, then he (or his heirs) could sell and the remaining funds after payoff belonged to him. The bank only has a loan on the home, they do not have any ownership.

After our conversation, I could see he was feeling better. He was smiling and standing up straighter. I asked him if he thought he could sleep tonight and he answered, "Oh yes, you've taken a huge weight off my shoulders!" It made me feel so awesome to have put his mind at ease! I was higher than a kite! I gave him my business card and told him, that if he ever got to the point again that he was losing sleep over his reverse mortgage to please call me! I would be happy to keep him grounded with facts, not scare tactics or fiction.

If you (or your parents) are concerned about an existing reverse mortgage, you might be just fine. Remember to do the four things:

Occupy the home.
Keep current on property taxes.
Keep the home insured.
Maintain the home.

As long as those four things are done, you will not be foreclosed on, even if the amount owed is more than the home value, and you will never be asked to make a payment on the loan. I hope that this information will bring peace of mind to senior homeowners that may be wondering....please pass it on.

As always I welcome and encourage your comments and feedback.

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Informative Video by AARP on Reverse Mortgage, Rescue or Trap?

Tue, 27 Oct 2009 13:14:43 -0500

I just finished watching this video from "Inside E-Street" by AARP. An extremely balanced piece on reverse mortgages. The video is a half an hour in length and is packed all the way through to the end with great information. I heartily recommend listening to the whole piece.

http://link.brightcove.com/services/player/bcpid24036493001?bctid=44798109001

They don't really mention all othe other options that senior homeowners should look at, besides a traditional home equity line. So I will fill you in here.

Alternative Options that should be looked at when considering a reverse mortgage.
Regular Line of Credit
City, County & State Property Tax deferral programs
Selling the Home
Renting out a portion of the home.
Obtaining part or full time employment

Can you think of any others?

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.

Example of a Purchase Scenario using a Reverse Mortgage

Fri, 07 Aug 2009 17:27:47 -0500

In this post - An example of a way the HECM For Purchase could be used. I always find that if I can place new learning into an example, then the learning has a better chance of sticking.

First thing to know is that the Reverse Mortgage for Purchase (or HECM For Purchase) is not your typical 80/20 loan. The required down payments will be much larger than 20%. I know that's not the best news, but keep reading. This loan requires no minimum credit score or debt to income! So if you have a senior homebuyer who just sold their big ole family house that they bought for $32,000 30 years ago for $350,000 they just might have a sizeable down payment!

Here's one example:

Mr. & Mrs. Barry Buyer (fake name), just sold their rambling family home (hopefully you were the listing Realtor!) and they netted after all costs $150,000.00. Now they want to buy a 3 bedroom 2 bath single story home somewhere in Temecula or Murrieta. Their income is about $3000.00 per month between the two of them. What are you going to show them? Anything over $150,000 will either cause them to tap into savings or require a loan of some kind. Any loan is going to require monthly payments and probably for 30 years. Maybe they'd be better off renting - or maybe a reverse mortgage would work. Here's how.

You show them a beautiful 3 bedroom home in Murrieta listed at $280,000. It's fairly new, in a great neighborhood and single story of course! Newer is important because they are planning that this is the home they will live in until they "graduate" so ease of maintenance is a key buying point. In this example our buyers are able to purchase a higher value home and STILL never have to make a home payment.

Here's what happens:

Home Price $280,000

Closing Costs $ 12,808 (including title, escrow, MIP, loan fees.)

Funds Needed to Close $292,808

Where the money is coming from?

New HECM Loan $161,122

Cash From Buyer $131,686 (leaving them some change)

$ From Lender and Buyer $292,808

So - Depending upon your clients dreams of retirement life they may find that a reverse mortgage is an appropriate vehicle for purchasing their "rest of life" home.

Some cautionary words - because the loan never requires a monthly payment, each month the loan balance goes up impacting the homeowner's equity. In essence the remaining equity is where the payments come from. If the home does not appreciate much and our homeowners live long enough there could come a day when they have zero equity or are upside down. Then what? Well, as long as the homeowner is living in the home and paying the property taxes, keeping the home insured and in good maintenance there would not be a default. So the homeowner can still remain in the home with no payments.

So what happens when they die? Well, it depends upon what the heirs want to do? If there is equity - sell the house and keep the change, refinance the balance, or pay it off. Exactly the same as they would if a forward mortgage was encumbering the home. If there is no equity left, then they have two choices - one, pay the balance due and keep the property or two, sell the home for fair market value and the lender will get the balance of what's left by filing a claim on the MIP Insurance on the loan.

These are very simple explanations - for a more detailed explanation please read the HUD guidelines at. http://www.hud.gov/offices/hsg/sfh/hecm/hecmabou.cfm

Which in part say the following: "The HECM insurance guarantees that you will receive expected loan advances and that you will not have to repay the loan for as long as you live in your home. The insurance also guarantees that, if you or your heirs sell your home to repay the loan, your total debt can never be greater than the value of your home." BUT-if you sell it must be an arms length transaction, meaning if the balance due is greater than the present value; you cannot sell it to a relative for market value to excuse the remaining balance. It's just like any other FHA insured loan in that respect.

Ok - this post is way too long already... I'll finish up now and post another sample scenario tomorrow! I'm heading out to help a client who already has a reverse mortgage, take advantage of the new higher limits (lucky people live close to the beach and their little bungalow is worth a heap of money even in this market) they can access another $100K and still have tons of equity and no monthly payments. They have no children to leave the equity too ... "Someone's going to spend our equity -may as well be us!

Deborah Nance, Reverse Mortgage Professional for Corona, the Inland Empire and Southern Californa.