Reverse Mortgage For Home Purchases[1]


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New FHA Home Financing Options. How to use a FHA Insured Reverse Mortgage to Purchase a property.

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Reverse Mortgage For Home Purchases[1]

  1. 1. Reverse mortgage for home purchases A new financing opportunity for purchase transactions. Carlos A. Camargo Reverse Mortgage Specialist
  2. 2. Trusted leadership you can count on -meeting the needs of senior homeowners <ul><li>As the nation’s leading retail originator of reverse mortgages, Wells Fargo is committed to helping seniors age 62 or older use the equity in their homes to realize financial independence and peace of mind. </li></ul><ul><li>Now with the new reverse mortgage for purchase program, count on Wells Fargo to help provide a new home financing option. </li></ul>
  3. 3. Table of contents <ul><li>What is a reverse mortgage? </li></ul><ul><li>What is the Home Equity Conversion Mortgage (HECM) for Purchase? </li></ul><ul><li>How can it help senior homebuyers? </li></ul><ul><li>Examples of a HECM for Purchase transaction </li></ul><ul><li>Frequently asked questions </li></ul>
  4. 4. What is a reverse mortgage? <ul><li>A reverse mortgage is a non-recourse loan that enables homeowners — age 62 and older — to convert a portion of your home’s equity into tax-free 1 funds </li></ul><ul><li>There are no income, health, employment, or credit-score qualifying requirements 2 </li></ul><ul><li>The amount of funds you can qualify for is based on your age, the property’s value, and current interest rates </li></ul><ul><li>Funds may be obtained in a lump sum, monthly payments, a line of credit, or a combination of any of these options </li></ul><ul><li>Applicants must agree to participate in a counseling session with a HUD approved agency </li></ul>1. Consult a tax advisor 2. Loan proceeds are not considered income and will not affect Social Security or Medicare benefits. Monthly reverse mortgage advances may affect borrower eligibility for other programs. Consult either a local program office or an attorney to determine how, or if, monthly reverse mortgage payments might affect a specific situation.
  5. 5. Reverse mortgage for purchase <ul><li>What is the Home Equity Conversion Mortgage (HECM) for Purchase? </li></ul><ul><ul><li>An FHA-insured reverse mortgage </li></ul></ul><ul><ul><li>Enables senior homebuyers, age 62 or older, to purchase a new primary residence and obtain a reverse mortgage in simultaneous transactions with no monthly mortgage payments </li></ul></ul><ul><ul><li>Allows you to combine reverse mortgage proceeds with a down payment from your current home sale or other assets, to purchase a new home </li></ul></ul>
  6. 6. Reverse mortgage for purchase <ul><li>How can it help you? </li></ul><ul><ul><li>Purchase a new home without taking on a new monthly mortgage payment </li></ul></ul><ul><ul><li>Purchase a primary residence suitable for their current needs </li></ul></ul><ul><ul><li>Purchase a home in a senior housing community </li></ul></ul><ul><ul><li>Move into a new home that’s easily accessible with modern amenities </li></ul></ul><ul><ul><li>Downsize to a smaller, easier-to-maintain home </li></ul></ul><ul><ul><li>Relocate closer to friends and family members </li></ul></ul>
  7. 7. Reverse mortgage for purchase <ul><li>How does the program work? </li></ul><ul><ul><li>Step one: </li></ul></ul><ul><ul><ul><li>Gloria and Ted Palmer, both 74, want to buy a more accommodating single-story home </li></ul></ul></ul><ul><ul><ul><li>They work with real estate agent Jane Mills to sell their current two-story home </li></ul></ul></ul><ul><ul><ul><li>In a separate transaction, they look into buying a new single-story home in a housing development being built by Bill Davis </li></ul></ul></ul><ul><ul><ul><li>The Palmers meet with Mills and Davis and look at several homes priced at $300,000 </li></ul></ul></ul>
  8. 8. Reverse mortgage for purchase <ul><li>How does the program work? </li></ul><ul><ul><li>Step two: </li></ul></ul><ul><ul><ul><li>Mills introduces the Palmers to Carlos Camargo, a Reverse Mortgage Consultant with Wells Fargo Home Mortgage </li></ul></ul></ul><ul><ul><ul><li>Reynolds shows the Palmers how the reverse mortgage for purchase could provide the additional funds they’ll need 3 </li></ul></ul></ul><ul><ul><ul><ul><li>Purchase Price $300,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Reverse Mortgage Proceeds $177,002 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Cash Required To Close $123,000 </li></ul></ul></ul></ul>3. Actual loan amounts available depend on the rates in effect when a loan is closed and the actual origination fee and closing costs charged, the appraised home value and current equity loan limits in your county.
  9. 9. Reverse mortgage for purchase <ul><li>How does the program work? </li></ul><ul><ul><li>Step three: </li></ul></ul><ul><ul><ul><li>The Palmers combine the $123,000 from the sale of their departure home, as a down payment with the $177,000 reverse mortgage to purchase a new home for $300,000 — and have no monthly mortgage payments! </li></ul></ul></ul>
  10. 10. Frequently asked questions <ul><li>What sources are allowed for the cash required to close? 4 </li></ul><ul><ul><li>The sale of the departure home </li></ul></ul><ul><ul><li>The sale of the homebuyer’s other assets </li></ul></ul><ul><ul><li>The homebuyer’s savings </li></ul></ul><ul><li>What sources cannot be used for the cash required to close? </li></ul><ul><ul><li>Seller financing and concessions </li></ul></ul><ul><ul><li>Cash withdrawn from credit cards </li></ul></ul><ul><ul><li>A bridge loan of any kind </li></ul></ul><ul><ul><li>Subordinate financing </li></ul></ul><ul><ul><li>Gift money from parties involved in the transaction </li></ul></ul><ul><ul><li>Down payment assistance programs (DAPs) </li></ul></ul>4. These are examples of what sources may or may not be used to cover the cash required to close. For detailed information please contact your Reverse Mortgage Consultant.
  11. 11. Frequently asked questions <ul><li>What property types are eligible? </li></ul><ul><ul><li>Single family </li></ul></ul><ul><ul><li>HUD-approved condos </li></ul></ul><ul><ul><li>Planned unit developments (PUDs) </li></ul></ul><ul><ul><li>Two- to four-unit properties (one must be owner-occupied) </li></ul></ul><ul><ul><li>Manufactured homes built after June 15, 1976 </li></ul></ul><ul><li>What property types are not eligible? </li></ul><ul><ul><li>Co-ops </li></ul></ul><ul><ul><li>Second homes </li></ul></ul><ul><ul><li>Boarding houses </li></ul></ul><ul><ul><li>Bed and breakfast establishments </li></ul></ul><ul><ul><li>Manufactured homes built before June 15, 1976 and any on leased land </li></ul></ul>
  12. 12. Frequently asked questions <ul><li>What requirements must the new home meet? </li></ul><ul><ul><li>Must become the buyer’s primary residence </li></ul></ul><ul><ul><li>Must be occupied by the buyer within 60 days from closing date </li></ul></ul><ul><ul><li>Construction must be complete, the property habitable, and a certificate of occupancy or its equivalent issued prior to the loan application </li></ul></ul>
  13. 13. Essential facts <ul><li>Enables homebuyers age 62 or older to purchase a new home without taking on monthly mortgage payments </li></ul><ul><li>Reverse mortgage customers receive title to and own their new home </li></ul><ul><li>The sale of a departure home is a completely separate transaction from the purchase transaction and reverse mortgage for purchase </li></ul><ul><li>Reverse mortgage is placed on the new primary residence </li></ul><ul><li>Reverse mortgage proceeds will be calculated based on the youngest homebuyer’s age and the lowest value of either the new home’s sale price or appraised value or the national HECM lending limit </li></ul>
  14. 14. Industry leader <ul><li>Well Established. Well Respected. Wells Fargo. </li></ul><ul><li>For over 155 years, the Wells Fargo name has stood for reliability; integrity and pioneering progress that helps people manage their money and grow their assets. As part of the Wells Fargo & Company family, Wells Fargo Home Mortgage can provide easy access to banking, insurance, investment and consumer finance services to help our valued customers achieve their current and long-term financial goals. </li></ul>
  15. 15. For more information <ul><li>Contact information </li></ul>Information is accurate as of the date of printing and is subject to change without notice. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2009 Wells Fargo Bank, N.A. All rights reserved. 105091 3/09 Carlos A. Camargo 805-985-2808 Office Phone 818-324-3802 Cell Phone [email_address]