Reverse Mortgages For Purchases


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a slide show for realtors and those interested in using a HECM for purchase.

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  • Reverse Mortgages For Purchases

    1. 1. <ul><li>Age has its privilege! </li></ul>Purchase your dream “retirement” home by using a reverse mortgage! Buy the home you want, and continue to hold on to more of your retirement funds. The mortgage is repaid when the home is no longer your principal residence.
    2. 2. A new type of Purchase Money Mortgage <ul><li>No monthly repayment of mortgage </li></ul><ul><li>No personal liability for debt </li></ul><ul><li>No escrows for taxes and insurance </li></ul><ul><li>No health requirements </li></ul><ul><li>No minimum credit scores </li></ul><ul><li>No proof of income required </li></ul><ul><li>Proof of funds for closing is required </li></ul>
    3. 3. What properties are eligible? <ul><li>Property types include: </li></ul><ul><ul><li>Single-family homes </li></ul></ul><ul><ul><li>FHA Qualified Condominiums </li></ul></ul><ul><ul><li>Townhouses </li></ul></ul><ul><ul><li>FHA Qualified Manufactured Homes </li></ul></ul><ul><ul><ul><li>Built after 1976 </li></ul></ul></ul>
    4. 4. How much can you get? <ul><li>Not based on Loan-to-Value Guidelines </li></ul><ul><li>Amount available is based upon: </li></ul><ul><li>Age - the older you are, the more money you receive </li></ul><ul><li>Value of home </li></ul><ul><li>Current interest rates </li></ul><ul><ul><li>Interest rates are subject to market fluctuations. This will affect the amount available. </li></ul></ul><ul><li>Choice of Reverse Mortgage Program </li></ul><ul><ul><li>Adjustable rate programs based upon Treasury or LIBOR rates. </li></ul></ul><ul><ul><li>Fixed rate programs </li></ul></ul>
    5. 5. “ Owner Protected” <ul><li>Homeowners retain ownership and control of their home. </li></ul><ul><li>Remaining equity is passed to them or their estate when the house is sold or the mortgage is paid in full. </li></ul><ul><li>No personal liability! Amount due will never exceed the value of the home. </li></ul><ul><li>A lifetime right to occupy the home. </li></ul>
    6. 6. What safeguards are in place? <ul><li>Backed by the U.S. government (FHA loans only) </li></ul><ul><li>Full disclosures of terms, rates, and costs </li></ul><ul><li>Cannot lose the home by defaulting on mortgage payments </li></ul><ul><li>Title to property remains with the owner </li></ul><ul><li>Completion of a required HUD counseling session </li></ul>
    7. 7. Application & Processing <ul><li>Counseling </li></ul><ul><ul><li>Mandatory for all borrowers, POAs, Life Estate holders </li></ul></ul><ul><ul><li>HUD approved counselor follows an established protocol </li></ul></ul><ul><ul><li>Typically costs $75 to $125 and CANNOT be paid for by the lender </li></ul></ul><ul><ul><li>Generally takes 45 minutes to 1 hour </li></ul></ul><ul><ul><ul><li>Family members welcome </li></ul></ul></ul><ul><ul><ul><li>Completed by telephone or face-to-face </li></ul></ul></ul><ul><li>Application and Disclosure </li></ul><ul><ul><li>Completion of application package </li></ul></ul><ul><ul><li>Review of options and costs </li></ul></ul><ul><ul><li>Collection of photo identification, proof of date of birth, Social Security number, 90 day history of proof of funds, homeowner’s insurance binders, survey, and trust agreements, if applicable </li></ul></ul>
    8. 8. Loan Processing <ul><li>Processing begins after the counseling has been completed </li></ul><ul><ul><li>Signed, original HUD counseling certificate </li></ul></ul><ul><ul><li>Appraisal </li></ul></ul><ul><ul><li>Title work </li></ul></ul><ul><ul><ul><li>Search and binder (endorsements: FL ALTA 9, 6.2 neg am, 8.1 environmental protection, reverse mtg/line of credit; 5.1 PUD or 4.1 Condo </li></ul></ul></ul><ul><ul><ul><li>Survey </li></ul></ul></ul><ul><ul><ul><li>Trust review </li></ul></ul></ul><ul><ul><li>Payoff statements from lienholders </li></ul></ul><ul><ul><li>Credit bureau </li></ul></ul><ul><ul><li>Flood certification </li></ul></ul><ul><ul><li>Spot Condo review </li></ul></ul><ul><ul><li>Repair estimates, if needed </li></ul></ul><ul><li>Loan review and approval </li></ul><ul><ul><li>Meet all underwriting conditions </li></ul></ul>
    9. 9. Closing <ul><li>“ Clear-to-close” issued by lender </li></ul><ul><li>Title agent completes fee sheet and faxes to broker/lender </li></ul><ul><ul><li>Title insurance issued on appraised value </li></ul></ul><ul><ul><li>Mortgage is calculated at 150% of appraised value/lending limit </li></ul></ul><ul><ul><li>Doc stamps & Intangible taxes based on 150% </li></ul></ul><ul><li>Lender reviews final numbers and loan structure with client </li></ul><ul><li>Establish closing date, time, and place </li></ul><ul><li>Broker/Lender requests closing package </li></ul><ul><li>Title agent prints closing package and prepares docs </li></ul><ul><li>Closing and Celebration! </li></ul>
    10. 10. Example of $300,000 Purchase Price <ul><ul><li>Age Net Proceeds </li></ul></ul><ul><ul><li>$165,000* </li></ul></ul><ul><ul><li>64 $170,000* </li></ul></ul><ul><ul><li>66 $175,000* </li></ul></ul><ul><ul><li>68 $180,000* </li></ul></ul><ul><ul><li>70 $185,000* </li></ul></ul><ul><ul><li>80 $211,000* </li></ul></ul>Depending upon youngest age of borrower, the net amount varies: *Estimates only based upon 12/1/08 interest rates. Final proceeds depend upon variable closing expenses such as property insurance, flood insurance, etc.