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REVERSE MORTGAGE SPECIALIST
NMLS #450720 CalDRE #01349275
REVERSE MORTGAGES
Overview
If you are a homeowner age 62 or older and have paid off your mortgage or paid down a considerable amount, and are currently living in the home, you may participate in FHA’s Home Equity Conversion Mortgage (HECM) program. The HECM is FHA’s reverse mortgage program that enables you to withdraw a portion of your home’s equity.
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.
How the Program Works
There are many factors to consider before deciding whether a HECM is right for you. To aid in this process, you must meet with a HECM counselor to discuss program eligibility requirements, financial implications and alternatives to obtaining a HECM and repaying the loan. Counselors 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 specific needs. You can search online for a HECM counselor who will help clarify our reverse mortgage information.
Borrowers are not required to make monthly mortgage payments provided that they live in the home as a their principal residence, continue to pay property taxes, homeowners insurance, any HOA (Home Owners Association) dues, maintaining the property and complying with all loan terms. Failure to comply with all loan terms, the loan may go into default and the property can be subject to foreclosure.
The loan becomes due and payable when the last borrower or eligible spouse leaves permanently the home or fail to meet the loan terms.
Borrower Requirements
•Be 62 years of age or older *
•Own the property outright or paid-down a considerable amount
•Occupy the property as your principal residence
•Not be delinquent on any federal debt
•Have financial resources to continue to make timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.
•Participate in a consumer information session given by a HUD- approved HECM counselor.
* The reverse mortgage (HECM) loan is available to borrowers with an eligible non-borrowing spouse under the age of 62.
To be eligible, spouse must be married and living in the home at the time the loan closes and still living in the home as his/her primary residence at the time borrowing spouse passes.
When the eligible spouse passes away, allows eligible non-borrowing spouse to stay in the home without foreclosure as long as the surviving spouse continues to pay property taxes, homeowner’s insurance and HOA fees, home maintenance and complies with the loan terms.
Property Requirements
The following eligible property types must meet all FHA property standards and flood requirements:
•Single family home or 2-4 unit home with one unit occupied by the borrower
•HUD-approved condominium project
•Manufactured home that meets FHA requirements
Payments
For adjustable interest rate mortgages, you can receive payments with one of these options:
•Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
•Modified Tenure – combination of line of credit and scheduled monthly payments for as long as you remain in the home.
•Line of Credit – unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.
•Term – equal monthly payments for a fixed period of months selected.
•Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan.
Financial Requirements
-Timely payment of real estate taxes, hazard and flood insurance premiums will be verified
•Income, assets, monthly living expenses, and credit history will be verified.
Mortgage Amount Based upon
•Age of the youngest borrower or eligible non-borrowing spouse; and
•Current interest rate; and
•Lesser of appraised value or the HECM FHA mortgage limit of $1,149,825 or the sales price
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. This reverse mortgage information is vital to pricing your loan.
The HECM loan includes several fees and charges, which includes: 1) mortgage insurance premiums (initial and annual) 2) third party charges 3) origination fee 4) interest and 5) servicing fees. The lender will discuss which fees and charges are mandatory.
You will be charged an initial mortgage insurance premium (MIP) at closing. The initial MIP is 2% percent of the FHA mortgage limit ($1,149,825) or the appraised value whichever is lowest.
Over the life of the loan, you will be charged an annual MIP that equals 0.5% of the outstanding mortgage balance.
•Mortgage Insurance Premium: You will incur a cost for FHA mortgage insurance. The mortgage insurance guarantees that you will receive expected loan advances. You can finance the mortgage insurance premium (MIP) as part of your loan.
• Third Party Charges: Closing costs from third parties can include an appraisal, title search and insurance, surveys, inspections, recording fees, mortgage taxes, credit checks and other fees.
•Origination Fee: You will pay an origination fee to compensate the lender for processing your HECM loan. A lender can charge the greater of $2,500 or 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.
•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 real estate taxes and hazard insurance premium. Lenders may charge a monthly servicing fee of no more than $30 if the loan has an annually adjusting interest rate or has a fixed interest rate. The lender may charge a monthly servicing fee of no more than $35 if the interest rate adjusts monthly. At loan closing, the lender sets aside the servicing fee and deducts the fee from your available funds. Each month the monthly servicing fee is added to your loan balance. Lenders may also choose to include the servicing fee in the mortgage interest rate.
Jumbo Reverse Mortgage
What is a Jumbo Reverse Mortgage?
Same basic principles than the FHA Insured (HECM) reverse mortgage.
Age 62 and older *
Must be borrowers primary residence
Non-recourse loan (your or your heirs will never owe more than your home is worth)
Keep title to your home
No monthly mortgage payments (Borrower must continue to pay property taxes, homeowner’s insurance and maintain the property)
Line of Credit
No pre-payment penalty
Financial Assessment
Counseling
Borrowers are not required to make monthly mortgage payments provided that they live in the home as a their principal residence, continue to pay property taxes, homeowners insurance, any HOA (Home Owners Association) dues, maintaining the property and complying with all loan terms. Failure to comply with all loan terms, the loan may go into default and the property can be subject to foreclosure.
The loan becomes due and payable when the last borrower or eligible spouse leaves permanently the home or fail to meet the loan terms.
*Non-borrowing spouses (NBS) are eligible, but are not subject to the same protections offered with a HECM. Therefore, if there is a NBS, they should strongly consider a HECM loan. The Jumbo allows a NBS with additional requirements, such as a video-taped interview session with the borrower’s attorney and a court reporter to ensure all parties understand the transaction.
For people who own property that allows them to borrow
more than the FHA maximum HECM amount
No Mortgage Insurance premium (MIP)
Borrowers can access funds at funding or leave a portion in a Line of Credit.
Loan amounts up to $4 million. (unlike FHA insured reverse mortgage (HECM), which is subject to a portion of FHA
maximum lending limit of $1,149,825 or the appraised value of the home, whichever is lowest)
Up to $10 million appraised value.
Webinars
Hi there,
You are invited to a Zoom webinar.
When: TO BE ANNOUNCED AM Pacific Time (US and Canada)
Topic: Reverse Mortgage: A Powerful Tool for Financial Professionals
Register in advance for this webinar:
https:
After registering, you will receive a confirmation email containing information about joining the webinar.
ABOUT ME
I have been in the mortgage industry for 20 years, exclusively handling reverse mortgages. I am a real estate broker and NMLS (Nationwide Multistate Licensing System & Registry) and DRE (California Department of Real Estate) licensed loan officer.
From 2003 to 2006 and 2009 to 2011, I was Reverse Mortgage Westside division Branch Sales Manager for Wells Fargo Home Mortgage from 2011 to 2016, I served as Southwest Divisional Sales Manager from 2016 to 2019for Liberty Home Equity Solutions a top reverse mortgage lenders in USA.
From 2016 until January 2019, I became a Broker Associate with Aries Loans Inc, a direct mortgage lender.
In January 2019, I joined as a Broker Associate, Senior Funding a company who specialized in Reverse Mortgage only.
Senior Funding represents the major reverse mortgage lenders in the country, and we are Better Business Bureau A+ Rated and a member of the National Reverse Mortgage Lenders Association (NRMLA).
Testimonials
I am a recent widow living on a fixed income. Aside from a modest trust the only major asset was my home, which was paid for. A friend suggested I contact Luigi to see if the line of credit available for senior home owners would solve my need for cash. It was the best decision I’ve ever made. Thanks to Luigi’s expertise and guidance, he made the process easy, quick and even pleasant. I’m now able to access the equity in my home to pay all my expenses, emergencies, and travel. I’m extremely grateful I was referred to him and wholeheartedly encourage anyone who has similar circumstances to contact him.
Sincerely,
Cindy Snelling
Orange County
CONTACT US
This information is not intended to be a substitute for legal, tax or financial advice. Consult with a qualified attorney, accountant or financial advisor for additional legal or tax advice. These materials are not from HUD or FHA and were not approved by HUD or a government agency.