Mortgages
TYPES OF REVERSE MORTGAGES <ul><li>FHA - Home Equity Conversion Mortgage (HECM) </li></ul><ul><li>HomeKeeper by Fannie Mae...
HECMs Versus Other Reverses <ul><li>The largest loan advances of any reverse mortgage and most choices in how proceeds are...
Comparison of Loan Types
Eligibility <ul><li>Must be aged 62 or over, and live in home as a principal residence </li></ul><ul><li>Must be a single-...
Repayment <ul><li>When the last surviving borrower dies or sells the home. </li></ul><ul><li>Borrower allows the property ...
Loan Limits <ul><li>Dependant on age, current interest rates, home's value and method of payment  </li></ul><ul><li>Loan a...
HECM Maximum Loan Amount
Credit Line Appreciation <ul><li>Credit Line grows larger over time. Amount of cash available increases until all is withd...
Monthly Loan Advances <ul><li>Tenure Plan - Payments for only as long as borrower lives in home </li></ul><ul><li>Term Pla...
Interest Rates <ul><li>Most are adjustable interest rates tied to the current one-year U. S. Treasury Security rate </li><...
MULTIPLE DISTRIBUTION METHODS
Costs of Loan <ul><li>Origination Fee </li></ul><ul><li>3rd-Party Closing Costs </li></ul><ul><ul><li>Appraisal </li></ul>...
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Reverse Mortgage

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This is a PowerPoint presentation I prepared on Reverse Mortgages for the New York Bar Association

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  • COOP AMENDMENT PENDING HUD COUSELING – OFTEN A PHONE CALL
  • SINCE CREDIT LINE ACCUMULATES TAX FREE NOT WORTH ALWAYS WITHDRAWING THE MAX
  • Reverse Mortgage

    1. 1. Mortgages
    2. 2. TYPES OF REVERSE MORTGAGES <ul><li>FHA - Home Equity Conversion Mortgage (HECM) </li></ul><ul><li>HomeKeeper by Fannie Mae </li></ul><ul><li>Financial Freedom Cash Account </li></ul>
    3. 3. HECMs Versus Other Reverses <ul><li>The largest loan advances of any reverse mortgage and most choices in how proceeds are paid. </li></ul><ul><li>Proceeds can be used for any purpose. </li></ul><ul><li>Less costs associated with loan. </li></ul><ul><li>Available to homeowners with low to moderate incomes. </li></ul>
    4. 4. Comparison of Loan Types
    5. 5. Eligibility <ul><li>Must be aged 62 or over, and live in home as a principal residence </li></ul><ul><li>Must be a single-family residence Cooperatives NOT eligible </li></ul><ul><li>Home must be at least one year old and meet HUD's minimum property standards </li></ul><ul><li>Mandatory Counseling </li></ul>
    6. 6. Repayment <ul><li>When the last surviving borrower dies or sells the home. </li></ul><ul><li>Borrower allows the property to deteriorate </li></ul><ul><li>All borrowers permanently move to a new principal residence </li></ul><ul><li>the last surviving borrower fails to live in the home for 12 months in a row because of physical or mental illness </li></ul><ul><li>Taxes or homeowners insurance is unpaid </li></ul>
    7. 7. Loan Limits <ul><li>Dependant on age, current interest rates, home's value and method of payment </li></ul><ul><li>Loan amount of money is based on county limit, not on home's actual value. </li></ul><ul><li>Section 203-b of the National Housing Act sets home value limits by county. In 2003, limits range from $154,896 to $280,749 </li></ul><ul><li>If home is valued at $400,000 and county limit is $280,749, then cash advances are the same as if home were valued at $280,749. </li></ul>
    8. 8. HECM Maximum Loan Amount
    9. 9. Credit Line Appreciation <ul><li>Credit Line grows larger over time. Amount of cash available increases until all is withdrawn </li></ul><ul><li>Unwithdrawn proceeds increase at same rate as mortgage interest rate </li></ul><ul><li>Credit Line grows larger every month until the last of principal of the reverse mortgage is withdrawn. </li></ul><ul><li>Taking a large lump sum of cash from a HECM and putting it into savings or most investments not advised. </li></ul>
    10. 10. Monthly Loan Advances <ul><li>Tenure Plan - Payments for only as long as borrower lives in home </li></ul><ul><li>Term Plan - Payments for a specific period of years </li></ul><ul><ul><li>A higher payment each month than tenure plan </li></ul></ul><ul><ul><li>The shorter the term, the larger the monthly advances </li></ul></ul><ul><ul><li>Payments end with term, with no obligation to repay. </li></ul></ul><ul><li>Can use any combination </li></ul>
    11. 11. Interest Rates <ul><li>Most are adjustable interest rates tied to the current one-year U. S. Treasury Security rate </li></ul><ul><li>Annually Adjustable: </li></ul><ul><ul><li>must be the same change (up or down) that occurred in the one-year Treasury rate </li></ul></ul><ul><ul><li>capped at 2 percentage points per year and 5 total points over the life of the loan. </li></ul></ul><ul><li>Monthly Adjustable: </li></ul><ul><ul><li>must be the same change (up or down) that occurred in the one-year Treasury rate </li></ul></ul><ul><ul><li>capped at 10 percentage points over the life of the loan. </li></ul></ul>
    12. 12. MULTIPLE DISTRIBUTION METHODS
    13. 13. Costs of Loan <ul><li>Origination Fee </li></ul><ul><li>3rd-Party Closing Costs </li></ul><ul><ul><li>Appraisal </li></ul></ul><ul><ul><li>Title search and insurance </li></ul></ul><ul><ul><li>Surveys and inspections </li></ul></ul><ul><ul><li>Recording fees </li></ul></ul><ul><ul><li>Mortgage taxes </li></ul></ul><ul><ul><li>Credit checks </li></ul></ul><ul><li>Mortgage Insurance Premium (MIP) </li></ul><ul><li>Servicing Fees </li></ul>

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