What Is A Reverse Mortgage?

What Is A Reverse Mortgage? For senior homeowners across the U.S., retirement is a time to finally celebrate freedom from work obligations. However, retirement could also mean living on a fixed income, causing some financial stress. 38% The percentage of the oldest boomers born in 1946 feel that they are on track to reach their retirement savings goals or have already achieved them. 72% 奔 介 余 六 奔 介 奔 介 余 介 The percentage of workers age 55 and older feel that their financial situation is worse than it was two years ago. Fortunately, a powerful tool exists that may allow retirees to enjoy financial freedom. This tool is called a REVERSE MORTGAGE. DEFINITION A reverse mortgage is a type of home equity loan for seniors age 62 and older used to turn a portion of their home equity into cash as needed. They were also designed with unique features to make the loan manageable for older Americans on a fixed income. A federally-insured reverse mortgage is called a Home Equity Conversion Mortgage (HECM). FACT 90% of all reverse mortgages in the U.S. are federally-insured HECM loans. Where Do Reverse Mortgages Come From? The History of Reverse Mortgages Nelson Haynes, of Deering Savings and Loan in Portland, Maine designs this unique loan to help the recently widowed wife of his old high school football coach stay in her home. The 1st congressional hearing regarding reverse mortgages is held. The Senate approves a proposal to insure these loans by the Federal Housing Administration (FHA). President Ronald Reagan signs the Reverse Mortgage Bill into law, giving the U.S. Department of Housing and Urban Development (HUD) the authority to insure reverse mortgages through the FHA. With added consumer safeguards and widespread recognition from the mortgage industry, there are more than one million reverse mortgage borowers in the U.S. today. REVERSE MORTGAGES THE REVERSE FEDERAL INSURANCE IS ВЕСОME MORTGAGE IS BORN PROPOSED FEDERALLY-INSURED TODAY 1961 1983 1988 2015 PARTMENT OF HOUA LOP How Does A Reverse Mortgage Work? A reverse mortgage works just like any home equity loan, except for the method of repayment. TRADITIONAL LOAN REVERSE MORTGAGE Repayment of the loan is deferred until all Borrower pays a minimum required payment every month to pay down the loan. the borrowers move out of or sell the home, pass away, or do not comply with the loan terms. At that time, the loan, including all the interest and fees, is repaid in full, usually from the sale of the house. How Do You Qualify? Basic Requirements Include: Be at least 62 years old Own your own home Live there as your primary residence Have about 50-55% or more equity in your home How Do Reverse Mortgages Benefit Seniors? Benefits and Features: You remain the owner of your home. You can stay in your There are no monthly mortgage payments required. home You have multiple disbursement options for your funds. Social Security and Medicare Loan proceeds are tax-free (property taxes must be paid). benefits are unaffected. Is a Reverse Mortgage Safe? Consumer Safeguards To provide the highest standard of consumer safety, HUD continuously adds protections to the industry. Some of these safeguards are: 25 NO PRE-PAYMENT NON-RECOURSE COUNSELING FINANCIAL HUD FEE PENALTY LOAN ASSESSMENT LIMITATIONS Required third party counseling with an FHA-approved Lenders thoroughly evaluate every HECM origination fees are regulated by the government. You can repay your You will never owe loan at any time without incurring any more than what the house is worth. applicant's ability to keep up with the agency. additional costs. loan's financial obligations to minimize default in the future. Do Borrowers Have Any Obligations? Because you are not paying a monthly mortgage payment, these responsibilities must be met in order to avoid forclosure: Continue paying property taxes Comply with all the loan terms Maintain homeowners insurance Pay for home repairs Stay in the home as your primary residence Meet basic home maintenance What Do You Use a Reverse Mortgage For? Reasons for Reverse There are no restrictions on 67% 33% 27% 23% how you can use your reverse pay off their debt mortgage funds. According to a survey by the National increase their income Council on Aging, most potential borrowers would like to use their reverse mortgage funds in the following ways: enhance their quality of life save for emergencies *Borrowers were allowed to select multiple reasons for their reverse mortgage interest. Is a Reverse Mortgage Right For You? Some things to consider: YES! |NO! You want to access your You want to age in the comfort of your home You plan to leave your You plan to move out home's equity in cash home for more than 12 of your home consecutive months You do not plan to sell your You appreciate the You may not want to age in You are not sure you protection that federal insurance provides home or move away in the your home. can fulfill all loan near future obligations including paying homeowners insurance and property taxes. You are able to continue paying your property taxes, homeowners insurance, and maintain basic home repairs What do Real Borrowers Think? Testimonials 66 'I am on a fixed income and the balances 66 After my reverse mortgage I don't have a 66 I just wanted to have a line of credit in on my cards kept creeping up. I now have paid off my credit cards, I have money in the bank, and I still have my house payment anymore, I paid my van off and paid my bills. I would case we had an emergency. It makes me feel pretty good knowing there's a cushion there and I don't have to fret or recommend it." home. This has been the best financial worry if something happens." decision I have ever made." Delbert W. Antioch, CA Donna P. Margaret T. Pinconning, MI Summerfield, NC We want you to be educated and informed about your financial options in retirement. Call us and speak with an expert that can help you decide if a reverse mortgage loan may be a good fit for you. AAG American Advisors Group AAG.com 1-800-AAG-0103 SOURCES: "Changing Attitudes, Changing Motives: The MetLife Study of How Aging Homeowners Use Reverse Mortgages." MetLife.com. Metlife Mature Market Institute. https://www.metlife.com/assets/cao/mmi/publications/studies/2012/studies/mmi-changing-attitudes-changing-motives.pdf "Frequently Asked Questions about HUD's Reverse Mortgages." HUD.go. U.S. Department of Housing and Urban Development. ND. Web. 31 August 2015. http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten Guerin, Jessica Linn. "Spotlight: A Historical Timeline of the HECM Program." ReverseReview.com. The Reverse Review. Web. http://www.reversereview.com/magazine/spotlight-a-historical-timeline-of-the-hecm-program.html Lim, Alberta. "What is a Reverse Mortgage?" LivingBetter50.com. LivingBetter50. 30 August 2015. Web. http://livingbetter50.com/what-is-a-reverse-mortgage/ "Mortgagee Letter 2014-22: HECM Financial Assessment and Property Charge Requirements." HUD.gov. U.S. Department of Housing and Urban Development. 10 November 2014. Web. 31 August 2015. http://portal.hud.gov/hudportal/documents/huddoc?id=14-22ml.pdf "Mortgagee Letter 2014-12: HECM New Principal Limit Factors." HUD.go. U.S. Department of Housing and Urban Development. 27 June 2014. Web. 31 August 2015. http://portal.hud.gov/hudportal/documents/huddoc?id=14-12ml.pdf "Mortgagee Letter 2014-07: HECM Program Non-Borrowing Spouse." HUD.gov. U.S. Department of Housing and Urban Development. 25 April 2014. Web. 31 August 2015. http://portal.hud.gov/hudportal/documents/huddoc?id=14-07ml.pdf NMLS# 9392 (www.nmlsconsumeraccess.org). American Advisors Group (AAG) is headquartered at 3800 W. Chapman Ave., 3rd & 7th Floors, Orange CA, 92868. AAG conducts business in the following states: AK (Alaska Mortgage Broker/Lender License No. AK9392), AL, AR, AZ (MB_0911141), CA (CA Loans made or arranged pursuant to a California Finance Lenders Law license (603F324) and Licensed by the Department of Business 0versight under the California Residential Mortgage Lending Act (4131144)), cO (Regulated by the Division of Real Estate; to check the license status of your mortgage loan originator, visit http://www.dora.state.co.us/real-estate/index.htm), CT, DC (District of Columbia Mortgage Dual Authority License No. MLB9392), DE, FL, GA (residential Mortgage Licensee #22849), IA, ID, IL (Illinois Residential Mortgage Licensee; Illinois Commissioner of Banks can be reached at 100 West Randolph, 9th Floor, Chicago, Illinois 60601, (312)814-4500), IN, KS (Kansas Licensed Mortgage Company MC. 0025024), KY, LA MD, ME (SCM11356), MI, MN, MO, MS (Licensed by the Mississippi Department of Banking and Consumer Finance), NC, ND, NE, NJ (Licensed by the N.J. Department of Banking and Insurance), NM, NV, NY (Licensed Mortgage Banker-NYS Department of Financial Services; American Advisors Group operates as American Advisors Group, Inc. in New York.), OH, OK, OR (ML-4623), PA (Licensed by the Pennsylvania Department of Banking 28356), RI (Rhode Island Licensed Lender), SD, SC, TN, TX (Mortgage Banker Registration), UT, VA (Licensed by the Virginia State Corporation Commission MC - 5134), VT (Vermont Lender License No. 6384), WA (Consumer Loan # CL-9392),WV, WI, WY (WY-DBA AAG Reverse Mortgage Lender/Broker License No. 2331). Reverse mortgages are first and second mortgage loans. A reverse mortgage increases the principal mortgage loan amount and decreases home equity (it is a negative amortization loan). Borrowers are responsible for paying taxes and insurance (which may be substantial). We do not establish an escrow account for disbursements of these payments. Fred Thompson is a paid AAG spokesperson. AAG works with other lenders and financial institutions that offer reverse mortgages. To process your request for a reverse mortgage, AAG may forward your contact information to such lenders for your consideration of reverse mortgage programs that they offer. These materials are not from HUD or FHA and were not approved by HUD or a government agency. *HOUSING