Reverse Mortgage


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General overview of the reverse mortgage product

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Reverse Mortgage

  1. 1. Put your home to work for you DAN BATTE Home Mortgage Consultant Reverse Mortgage Specialist
  2. 2. What is a reverse mortgage <ul><li>It’s a home loan that enables you to convert a portion of your home equity into tax-free funds without having to sell your home, give up title, or take on a new monthly payment. 1 </li></ul><ul><li>Instead of making monthly mortgage payments, your mortgage pays you. That’s the “reverse” part of a reverse mortgage. </li></ul><ul><li>Consult a tax advisor </li></ul>
  3. 3. How a reverse differs from a traditional mortgage <ul><li>With a traditional mortgage or home equity loan - </li></ul><ul><ul><li>Homeowners qualify based on their credit history and debt-to-income ratio. They borrow money which requires making monthly payments. </li></ul></ul><ul><li>With a reverse mortgage – </li></ul><ul><ul><li>Your mortgage makes payments to you and there are no income, employment or credit score qualifying restrictions. 2 </li></ul></ul><ul><li>Reverse Mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. Family members are also strongly encouraged to participate in these informative sessions. </li></ul>
  4. 4. Why get a reverse mortgage <ul><li>A reverse mortgage can give you access to your home’s equity without the burden of monthly payments </li></ul><ul><li>Reverse mortgage proceeds may be used for any purpose, including: </li></ul><ul><ul><li>Eliminating your existing mortgage </li></ul></ul><ul><ul><li>Meeting daily or monthly expenses </li></ul></ul><ul><ul><li>Covering healthcare expenses </li></ul></ul><ul><ul><li>Remodeling or home repairs </li></ul></ul><ul><ul><li>Reducing credit card debt </li></ul></ul><ul><li>With the reverse mortgage for purchase feature, the loan proceeds are used to help purchase a new primary residence better suited to your needs </li></ul>
  5. 5. How the loan proceeds are disbursed <ul><li>You have several options to receive your reverse mortgage proceeds, they are available to you in the following distribution options: </li></ul><ul><ul><li>Lump Sum — A specific amount is made immediately available (often used to pay off an existing mortgage). </li></ul></ul><ul><ul><li>Term — Funds are released in fixed monthly amounts for a set period requested by the customer. </li></ul></ul><ul><ul><li>Tenure — Funds are distributed in equal monthly allotments for as long as at least one homeowner continues to occupy the home as a principal residence. </li></ul></ul><ul><ul><li>Line Of Credit — Funds remain available for the customer to draw on as needed or in automatic monthly disbursements. </li></ul></ul><ul><ul><li>Combination — You can choose any combination of lump sum, monthly or line of credit disbursements. You can even receive an initial lump sum and put the rest in a line of credit. Regardless of how you choose to receive your proceeds, you can adjust your plan as often as you wish to accommodate changing needs. </li></ul></ul>
  6. 6. Three essential facts <ul><li>As long as all program requirements are met: </li></ul><ul><ul><li>You retain the title to the property and continue to own your home. </li></ul></ul><ul><ul><li>Instead of making mortgage payments, you can have a mortgage that pays you. </li></ul></ul><ul><ul><li>You cannot owe more than the value of the home. </li></ul></ul><ul><li>Program requirements include but are not limited to: </li></ul><ul><ul><li>One of the borrowers continuing to live in the house </li></ul></ul><ul><ul><li>Keeping the taxes and insurance current </li></ul></ul><ul><ul><li>Maintaining the property according to FHA standards </li></ul></ul><ul><li>If the program requirements are no longer being met and you or your heirs choose to retain ownership of the home, the full outstanding loan balance must be paid. </li></ul>
  7. 7. Age and eligibility requirements <ul><li>You and any co-owners must be at least 62 years old </li></ul><ul><li>Your home must be your primary residence </li></ul><ul><li>You must own your home free and clear, or the existing mortgage must be paid off with the loan proceeds </li></ul><ul><li>Educational counseling with a HUD-approved counselor is required </li></ul>
  8. 8. How much can I borrow <ul><li>The amount that can be borrowed is determined by a HUD formula that is based on the following factors: </li></ul><ul><ul><li>The age of the youngest homeowner </li></ul></ul><ul><ul><li>The appraised value of the home </li></ul></ul><ul><ul><li>The current interest rate </li></ul></ul><ul><ul><li>The established lending limit </li></ul></ul>
  9. 9. What are the interest rate options <ul><li>Wells Fargo offers both fixed- and variable-rate reverse mortgages. </li></ul><ul><ul><li>With a fixed-rate reverse mortgage, your interest rate will remain the same through out the life of the loan </li></ul></ul><ul><ul><li>With a variable-rate reverse mortgage, the interest rate may adjust at predetermined periods. </li></ul></ul><ul><ul><ul><li>In most variable-rate cases, you may choose monthly or annual rate adjustments. </li></ul></ul></ul><ul><ul><ul><li>The frequency by which your interest rate adjusts – monthly or annually - will not affect the number of loan advances you receive, but will affect how fast or slow your loan balance grows. </li></ul></ul></ul>
  10. 10. The costs involved with a reverse mortgage <ul><li>A deposit for the appraisal is required to be paid at the time of application. </li></ul><ul><li>There are additional closing costs which may be financed into the loan such as: </li></ul><ul><ul><li>Origination fee </li></ul></ul><ul><ul><li>Title insurance </li></ul></ul><ul><ul><li>Mortgage insurance premium </li></ul></ul><ul><ul><li>Attorney fees </li></ul></ul><ul><li>You are expected to continue maintaining the property and paying the real estate taxes and homeowners insurance premium </li></ul>
  11. 11. Reverse mortgage repayment <ul><li>You do not need to repay the loan as long as the program requirements are met, including: </li></ul><ul><ul><li>You or one of the borrowers continue to live in the house </li></ul></ul><ul><ul><li>You keep the property taxes and homeowners insurance current </li></ul></ul><ul><ul><li>You maintain the property to FHA standards </li></ul></ul><ul><li>The balance due can come from home sale proceeds, or from other resources such as, savings, insurance or possibly applying for a new mortgage. There is no requirement that the home be sold, only that the loan be repaid. </li></ul><ul><li>Because the home is the only collateral attached to the loan, any remaining home equity, along with your other possessions, belongs to you or your heirs. </li></ul>
  12. 12. The reverse mortgage loan process <ul><li>Discuss your post-retirement home financing goals with a reverse mortgage consultant. </li></ul><ul><li>Receive consumer counseling from a HUD-approved counselor. </li></ul><ul><li>Meet with a Wells Fargo Reverse Mortgage Consultant to apply for your loan. </li></ul><ul><ul><li>Fill out an application </li></ul></ul><ul><ul><li>Select a payment plan </li></ul></ul><ul><ul><li>Present required documentation </li></ul></ul><ul><li>Underwriting and loan decisioning process. </li></ul><ul><li>Upon approval, a closing is scheduled. Initial interest rate will be set the week of closing. </li></ul><ul><li>After any existing debt on your home is paid in full, your loan proceeds are disbursed. </li></ul>
  13. 13. Frequently asked questions <ul><li>Who owns the home? </li></ul><ul><ul><li>You do. You retain the title and ownership of your home. The bank does not own your home. </li></ul></ul><ul><li>Can the bank take my home? </li></ul><ul><ul><li>No, as long you continue to occupy the home as your primary residence, pay the appropriate taxes and insurance, and maintain upkeep of your home. 3 </li></ul></ul>3. As long as all program requirements are met.
  14. 14. Frequently asked questions <ul><li>Are there restrictions on how I can use my Reverse Mortgage proceeds? </li></ul><ul><ul><li>No. It’s your money to use as you see fit. Some common uses include: </li></ul></ul><ul><ul><ul><li>Eliminating your existing mortgage </li></ul></ul></ul><ul><ul><ul><li>Meeting daily or monthly expenses </li></ul></ul></ul><ul><ul><ul><li>Covering healthcare expenses </li></ul></ul></ul><ul><ul><ul><li>Remodeling or home repairs </li></ul></ul></ul><ul><ul><ul><li>Reducing credit card debt </li></ul></ul></ul>
  15. 15. Frequently asked questions <ul><li>Will receiving my reverse mortgage proceeds in monthly payments affect my Social Security or Medicare benefits? </li></ul><ul><ul><li>If you opt to receive monthly payments, they will not affect your Social Security or Medicare benefits. However, your eligibility for need-based programs such as Medicaid or state assistance programs may be impacted. We recommend that you consult a tax or legal advisor and your local Area Agency on Aging for advice. </li></ul></ul>
  16. 16. Frequently asked questions <ul><li>What if I decide to sell my home? </li></ul><ul><ul><li>You always retain title to your home during the period of your Reverse Mortgage loan. You can sell your home at anytime and pay off the reverse mortgage with the proceeds. </li></ul></ul>
  17. 17. Well established. Well respected. Wells Fargo. <ul><li>Wells Fargo Home Mortgage is the nation’s leading retail originator of reverse mortgages. </li></ul><ul><li>Wells Fargo & Company is a diversified financial services company with 276,000 team members who provide banking, insurance, investments, mortgage and consumer finance for more than 48 million customers. </li></ul><ul><li>Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A., and has a presence in mortgage stores and bank locations serving all 50 states. </li></ul>
  18. 18. Financial independence and peace of mind <ul><li>I can help you choose the Reverse Mortgage financing solution that best fits your individual needs and requirements. </li></ul><ul><li>DAN BATTE </li></ul><ul><li>Reverse Mortgage Consultant </li></ul><ul><li>972-935-0297 Phone </li></ul><ul><li>1-800-566-3560 Toll Free </li></ul><ul><li>[email_address] </li></ul>All program requirements must be met. The information in this presentation is accurate as of the date of printing and is subject to change without notice. Wells Fargo Home Mortgage a division of Wells Fargo Bank, N.A. © 2009 Wells Fargo Bank, N.A. All Rights Reserved. #102107 5/09