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Reverse Mortgages: What to Know

Reverse Mortgage Facts What to know A Reverse Mortgage might be for you if... How a Reverse Mortgage Works... The amount of money available to you is calculated by the following factors: You are definitely staying in your home. Either you simply do not want to leave, or other options are undesirable or expen- sive. Age You will receive more money if your age is greater. Enjoying your retirement is important to you. Value of your home Having a financial cushion for home repairs, medical bills and/or a long term condition makes sense to you. The amount of money generated by your reverse mortgage depends on your home's appraised value. A higher appraised value equals more money, with a maximum of $625,000 available. You typically need additional income and your home is your only major asset. Current interest rate The current interest rate is factored in as well. You like the security that comes from knowing your financial needs are well cared for. Payment type You can receive payment in fixed monthly payments, a credit line, a lump sum, or a combination of all three types of payment. Find out if you qualify No payment is required on the mortgage until you cease to líve in the homė. At this time, the heirs or borrower may decide to... You are 62 or older - Pay back the loan and maintain ownership of the home. Yes No - Pay back the loan by selling the home. Are you the sole owner of your property? What is the cost of a reverse mortgage? Yes No Origination Fee Can you easily pay off your mortgage with the amount you will earn from a reverse mortgage? The origination fee compensates the lender who processes the loan. For homes valued below $250,000, the origination fee can be as much as $2,500. For homes valued above $250,000, the origination fee is capped at 2% of the value of the home. Regardless of the value of your home, this fee can be no greater than $6,000. Yes No Mortgage Insurance Premium The mortgage insurance premium ensures you will not have to repay the loan as long as you stay in your home and that loan advances will be received. The cost of an up front mortgage insurance premium is 2% of the amount your home is worth with a monthly premium of .5% of the loan balance. Is the property your primary residence? Yes No Closing Costs Do you have any federal debt that is considered delinquent? Closing costs include fees for third party services, including credit checks, mortgage taxes, recording fees, inspections, surveys, title search and insurance, an appraisal fee and other fees. All in all, closing costs can total several thousand dollars. No Yes Servicing Fee Your property meets FHA guidelines for a single family, 1-4 unit, or manufactured home or HUĎ approved condo. The servicing fee is charged monthly as compensation for the lenders and agents responsible for servicing the loan each month. Responsibilities include monthly statements, disbursing proceeds and ensuring each requirement has been met. The servicing fee will be no greater than $35 per month. Yes No Interest Rate Your answers indicate that you qualify for an HECM Reverse Mortgage. Congratulations! You do not qualify for reverse mortgage Like other mortgages, HECM loans accrue interest. You can choose either fixed or adjustable interest. Adjustable interest rates cannot be adjusted more than 2 percentage points each year, or 5 points throughout the entire period of the loan. IMPORTANT: In order to receive an HECM Reverse Mortgage, you MUST attend an HECM counseling session to learn more about eligi- bility, options and other requirements. Call (800) 569-4287 to find a counselor in your area. Just like any other mortgage, the cost of a reverse mortgage can seem high. On the bright side, most reverse mortgage costs will be covered by the proceeds of the reverse mortgage itself. Advantages of a Reverse Mortgage Important for seniors... A reverse mortgage can allow you to improve your qualify of life or keep your financial independence. iscuss your reverse mortgage with your family before making any decisions. It's possible that your heirs value your home differently than you do. A reverse mortgage makes it possible to borrow against your home equity while living in your home. Mortgage regulations as established by the Federal govern- ment are always undergoing new changes. Do not proceed without speaking to a HECM counselor. Money generated by a reverse mortgage is tax-free. It is not typically classified as income. Work with a reverse mortgage specialist. For many sales agents, reverse mortgages are not their area of expertise. No payments (principle or interest) are required until either the house is sold or the loan becomes due Your income does not affect whether or not you qualify for the loan. Infograph by Lender411.com It is not possible for your heirs to inherit any debt beyond the value of the home if sold. Lender 411 Reverse Mortgage Facts What to know A Reverse Mortgage might be for you if... How a Reverse Mortgage Works... The amount of money available to you is calculated by the following factors: You are definitely staying in your home. Either you simply do not want to leave, or other options are undesirable or expen- sive. Age You will receive more money if your age is greater. Enjoying your retirement is important to you. Value of your home Having a financial cushion for home repairs, medical bills and/or a long term condition makes sense to you. The amount of money generated by your reverse mortgage depends on your home's appraised value. A higher appraised value equals more money, with a maximum of $625,000 available. You typically need additional income and your home is your only major asset. Current interest rate The current interest rate is factored in as well. You like the security that comes from knowing your financial needs are well cared for. Payment type You can receive payment in fixed monthly payments, a credit line, a lump sum, or a combination of all three types of payment. Find out if you qualify No payment is required on the mortgage until you cease to líve in the homė. At this time, the heirs or borrower may decide to... You are 62 or older - Pay back the loan and maintain ownership of the home. Yes No - Pay back the loan by selling the home. Are you the sole owner of your property? What is the cost of a reverse mortgage? Yes No Origination Fee Can you easily pay off your mortgage with the amount you will earn from a reverse mortgage? The origination fee compensates the lender who processes the loan. For homes valued below $250,000, the origination fee can be as much as $2,500. For homes valued above $250,000, the origination fee is capped at 2% of the value of the home. Regardless of the value of your home, this fee can be no greater than $6,000. Yes No Mortgage Insurance Premium The mortgage insurance premium ensures you will not have to repay the loan as long as you stay in your home and that loan advances will be received. The cost of an up front mortgage insurance premium is 2% of the amount your home is worth with a monthly premium of .5% of the loan balance. Is the property your primary residence? Yes No Closing Costs Do you have any federal debt that is considered delinquent? Closing costs include fees for third party services, including credit checks, mortgage taxes, recording fees, inspections, surveys, title search and insurance, an appraisal fee and other fees. All in all, closing costs can total several thousand dollars. No Yes Servicing Fee Your property meets FHA guidelines for a single family, 1-4 unit, or manufactured home or HUĎ approved condo. The servicing fee is charged monthly as compensation for the lenders and agents responsible for servicing the loan each month. Responsibilities include monthly statements, disbursing proceeds and ensuring each requirement has been met. The servicing fee will be no greater than $35 per month. Yes No Interest Rate Your answers indicate that you qualify for an HECM Reverse Mortgage. Congratulations! You do not qualify for reverse mortgage Like other mortgages, HECM loans accrue interest. You can choose either fixed or adjustable interest. Adjustable interest rates cannot be adjusted more than 2 percentage points each year, or 5 points throughout the entire period of the loan. IMPORTANT: In order to receive an HECM Reverse Mortgage, you MUST attend an HECM counseling session to learn more about eligi- bility, options and other requirements. Call (800) 569-4287 to find a counselor in your area. Just like any other mortgage, the cost of a reverse mortgage can seem high. On the bright side, most reverse mortgage costs will be covered by the proceeds of the reverse mortgage itself. Advantages of a Reverse Mortgage Important for seniors... A reverse mortgage can allow you to improve your qualify of life or keep your financial independence. iscuss your reverse mortgage with your family before making any decisions. It's possible that your heirs value your home differently than you do. A reverse mortgage makes it possible to borrow against your home equity while living in your home. Mortgage regulations as established by the Federal govern- ment are always undergoing new changes. Do not proceed without speaking to a HECM counselor. Money generated by a reverse mortgage is tax-free. It is not typically classified as income. Work with a reverse mortgage specialist. For many sales agents, reverse mortgages are not their area of expertise. No payments (principle or interest) are required until either the house is sold or the loan becomes due Your income does not affect whether or not you qualify for the loan. Infograph by Lender411.com It is not possible for your heirs to inherit any debt beyond the value of the home if sold. Lender 411

Reverse Mortgages: What to Know

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An infograph by Lender411 detailing everything you need to know about reverse mortgages.

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Lender411

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Economy
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