What is a Reverse Mortgage

What is a REVERSE MORTGAGE? A reverse mortgage is defined as a lifetime mortgage or type of equity release available in the United States. Under a federal program overseen by HUD, Reverse Mortgages are only available for seniors who are 62 or older. What is a HECM The Home Equity Conversion Mortgage (HECM) is insured by the federal government, making this the most widespread type of reverse mortgage. Do you meet the requirements? Borrower Requirements Property Requirements A single family per 2-4 unit residence with a single unit occupied by the borrower Age 62+ A condominium project that qualifies under HUD guidelines The house is your principle residence A manufactured home that qualifies under FHA guidelines Attend a counseling session with a HECM counselor approved by the HUD How much money is available? For a property that does not have an existing mortgage, there are just 4 things that decide how much you can borrow: Value of the property Youngest borrower's age HECM FHA limit of Current interest rate $625,000 HECM Limit % 600k *or property's appraised value, whichever is smaller 300k 100k НЕСМ property Potential Reverse Mortgage Amounts Age Property Value Amount Available to Borrow 62 $300,000 $ 177,495 + 74 $300,000 $ 198,495 + %3D 84 $300,000 $ 214,095 %3D 62 $400,000 $ 241,195 %3D 74 $400,000 $ 265,195 + %3D 84 $400,000 $285,995 *This chart was created from market rate estimates on 5/17/2012. Amounts may be affected by location, rates, property value and between lenders. How will you receive payment? *It may be possible to change payment options. A service fee will apply. Tenure Receive fixed rate monthly payments while at least one borrower is alive and resides at the property as a principal residence. Monthly Payments $ + %24 Line of Credit Receive installments or unscheduled payments when you choose and in the amount you specify until the line of credit is exhausted. Modified Term Monthly Payments + Line of Credit are available for a period of time (in months) borrower. osen by the 4205 2000 3456 0125 Monthly Payments 24 Lump Sum 4205 2000 3456 0125 Receive the entire amount in one payment. Term Receive fixed rate payments each month for a number of months chosen by the borrower. Monthly Payments %24 Other Fees Interest Interest may be fixed or adjustable (monthly or annually). Adjustable rates are prohibited from shifting more than 10% during the course of the loan. Initial Mortgage Insurance Premiums Receive installments or unscheduled payments when you choose and in the amount you specify until the line of credit is exhausted. Annual Mortgage Insurance Premiums Premiums are calculated annually at a rate of 1.25% of the existing mortgage balance. Third Party Fees Title searches, appraisals, surveys, recording fees government taxes and other fees. Orginiation Fee Expect the lender to charge a processing fee on the reverse mortgage. The maximum allowable fee is $6,000 while the minimum fee is $2,500. Servicing Fees Typically, service fees are less than $50 per month and are compesation for the lenders and their agents who service the loan throughout the duration. INFOGRAPH BY SOURCES: http://www.en.wikipedia.org/wiki/Reverse_mortgage http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hedmabou Lender 411 Lender411.com %24 What is a REVERSE MORTGAGE? A reverse mortgage is defined as a lifetime mortgage or type of equity release available in the United States. Under a federal program overseen by HUD, Reverse Mortgages are only available for seniors who are 62 or older. What is a HECM The Home Equity Conversion Mortgage (HECM) is insured by the federal government, making this the most widespread type of reverse mortgage. Do you meet the requirements? Borrower Requirements Property Requirements A single family per 2-4 unit residence with a single unit occupied by the borrower Age 62+ A condominium project that qualifies under HUD guidelines The house is your principle residence A manufactured home that qualifies under FHA guidelines Attend a counseling session with a HECM counselor approved by the HUD How much money is available? For a property that does not have an existing mortgage, there are just 4 things that decide how much you can borrow: Value of the property Youngest borrower's age HECM FHA limit of Current interest rate $625,000 HECM Limit % 600k *or property's appraised value, whichever is smaller 300k 100k НЕСМ property Potential Reverse Mortgage Amounts Age Property Value Amount Available to Borrow 62 $300,000 $ 177,495 + 74 $300,000 $ 198,495 + %3D 84 $300,000 $ 214,095 %3D 62 $400,000 $ 241,195 %3D 74 $400,000 $ 265,195 + %3D 84 $400,000 $285,995 *This chart was created from market rate estimates on 5/17/2012. Amounts may be affected by location, rates, property value and between lenders. How will you receive payment? *It may be possible to change payment options. A service fee will apply. Tenure Receive fixed rate monthly payments while at least one borrower is alive and resides at the property as a principal residence. Monthly Payments $ + %24 Line of Credit Receive installments or unscheduled payments when you choose and in the amount you specify until the line of credit is exhausted. Modified Term Monthly Payments + Line of Credit are available for a period of time (in months) borrower. osen by the 4205 2000 3456 0125 Monthly Payments 24 Lump Sum 4205 2000 3456 0125 Receive the entire amount in one payment. Term Receive fixed rate payments each month for a number of months chosen by the borrower. Monthly Payments %24 Other Fees Interest Interest may be fixed or adjustable (monthly or annually). Adjustable rates are prohibited from shifting more than 10% during the course of the loan. Initial Mortgage Insurance Premiums Receive installments or unscheduled payments when you choose and in the amount you specify until the line of credit is exhausted. Annual Mortgage Insurance Premiums Premiums are calculated annually at a rate of 1.25% of the existing mortgage balance. Third Party Fees Title searches, appraisals, surveys, recording fees government taxes and other fees. Orginiation Fee Expect the lender to charge a processing fee on the reverse mortgage. The maximum allowable fee is $6,000 while the minimum fee is $2,500. Servicing Fees Typically, service fees are less than $50 per month and are compesation for the lenders and their agents who service the loan throughout the duration. INFOGRAPH BY SOURCES: http://www.en.wikipedia.org/wiki/Reverse_mortgage http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hedmabou Lender 411 Lender411.com %24