REVERSE MORTGAGES

Why is there a real estate company sharing information about Reverse Mortgages?

We understand that selling a home is an emotional process, especially if it’s a home that you’ve lived in for many years, made thousands of fond memories, and you just don’t want to leave that home! Maybe, because of financial changes, or retirement, it has become financially challenging to continue to maintain the home and make the payments. Yes, we could tell you why we’re the best company to sell your home, but what if we told you we have a solution for you to stay in your home? Would that be the better alternative to selling your home? If the answer is YES, we want to sign up for that job! Below is some additional information about Reverse Mortgages. Please read through it and if you’re still interested take a moment to give us a call and we’ll discuss your specific situation and find out if the Reverse Mortgage is the best option and will work for you. Not only do we assist clients buy and sell homes, but through our financing arm, Realtech Financial Services, we have been financing homes as well for more than 25 years. Let’s keep things on your terms and give you the power to determine when and if you want to sell your home.

Reverse Mortgages are just like a regular mortgage. You still own your home!

This is a common concern that I receive from homeowners as to why they don’t want to get a Reverse Mortgage. People say, “I don’t want a reverse mortgage because I want to own my home.” Whether it is a normal (forward) mortgage or a reverse mortgage, you still own the home subject to the mortgage. THE DIFFERENCE though is very important – On a regular mortgage you have a set payment you need to make every month, and if you don’t make that payment the lender will file to foreclose on your home. With a reverse mortgage, there is no monthly payment obligation! Instead the payment that you would have made stays in your bank account and the equivalent of the monthly interest is added to your loan balance. No risk of defaulting on the mortgage and having the lender foreclose on your home.

Reverse Mortgages haven’t received the positive attention they maybe should. They can be a wonderful tool for retirees to maintain a lifestyle, or just to be able to meet their month to month obligations.

Here at Realty World – Homes & Land we want to make sure that our clients understand their options. Selling a home is an emotional process and we’re very aware of that. Sometimes circumstances make it necessary to sell your home, but there could be solutions to help you stay in your home. A Reverse Mortgage can be that solution and can be used as a retirement tool. A Reverse Mortgage will eliminate your monthly mortgage payment, and you could receive a monthly distribution each month into your bank account as well. Yep. Not only will you save money by not having to make a payment, but you can receive a check every month, too.

A HECM (Home Equity Conversion Mortgage) is a special type of mortgage that enables homeowners age 62 or older to tap into the equity in their home. Unlike traditional home loans, no repayment of the HECM loan is required until you no longer occupy the home as your principal residence.

      Do you qualify for a Reverse Mortgage?

– Must be a minimum 62 years of age. Age of the youngest borrower determines eligibility.
– Non-Borrowing Spouses under 62 are allowed.
– Max loan amount is the lesser of:
FHA Mortgage Limit ($625,500)
Appraised value or Purchase price
– The older the home owner is and the higher the value of the home, the more proceeds or loan amount you will be qualified for.

-The home does not need to be paid off, but the more equity you have, the greater amount of a monthly distribution you can receive. AND, you don’t need to qualify based on rigid lender guidelines for a traditional mortgage! This is an enormous feature.

      Benefits:

– No monthly mortgage payment is ever required.
– Credit line grows over time. Yes, over time your credit line that you can access grows.
– Unused available funds grow at the same rate as the interest being charged.
– Qualified home owners should look at home equity as asset allocation.
– No pre-payment penalty.

– Make payments if you want.
– Funds are tax free.
Homeowners keep all future appreciation, no equity sharing.
Borrowers retain title to the home.

– No limitations to how the borrower may use the funds.
– Accessibility – qualifying is much easier than a traditional mortgage.
Allows seniors 62 or older to buy a home with HECM proceeds. This is also a great opportunity for seniors to use.
– Purchasing power – lower upfront investment than a cash purchase.
– Buy up – buy more house than you thought you could afford.
– Retain vital cash liquidity for future retirement needs.

      Will I still have an estate that I can leave to my heirs?

When the home owners or their heirs sell the home, their estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in the home belongs to the home owner or their heirs.

      When does the loan become due and payable?

A HECM loan must be repaid in full when the last remaining borrower permanently vacates the residence. The loan also becomes due and payable if:
– Borrowers did not pay property taxes or hazard insurance or violate other obligations.
– Borrowers permanently move to a new principal residence.
– The last borrower fails to live in the home for 12 months in a row.
– An example of this situation would be if they (or the last borrower) were to have a 12 month or longer stay in a nursing home.
– The borrowers allow the property to deteriorate and do not make necessary repairs.

      Consumer Protections:

– Reverse Mortgages are Non Recourse Loans.
– Non Borrowing Spouse (< 62) is now protected!
– All FHA HECM’s are insured through the Federal Housing Administration (FHA).
– Borrowers have no limit as to how long they can stay in the home.
– Education – counseling is required.
– Created by the Housing & Economic Recovery Act of 2008.
– Mortgage Insurance Premium (MIP) ensures the amount owed on the loan can never be more than the value of the home at the time of sale.

 

Our objective is to help you make the right decision and know your options. Whether it’s applying for a Reverse Mortgage, selling your home, or buying a home (with a Reverse Mortgage), we can help. We’re a well rounded real estate company that can assist in real estate sales and the financing of all types of real estate. We believe you can make the right decision for yourself and we’ll be there to assist and answer any questions you may have. 

You don’t need a realtor telling you that selling your home is the best option for you so they can make a commission! We want to help people that want to sell their home, when they want to, or need to. Not on the premise of “selling” people on the idea. We want to earn your business by doing what is best for you, not just producing a commission. When you decide what is best for you, whether it is to use a Reverse Mortgage to refinance your current mortgage, or to buy a new home with a Reverse Mortgage or traditionally, we’ll put the process in motion for you and guide you along the way.

If you’re interested in learning more about a Reverse Mortgage, please contact us. We can also send you a 28 page booklet that will provide you with details of what to expect if you were to get a Reverse Mortgage.

We look forward to hearing from you.

Jim Hitcher