A Tutorial on Reverse Mortgages_2

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					                                      A Tutorial on Reverse Mortgages
What is a Reverse Mortgage?
It is a special type of loan that enables all senior homeowners, age 62 and older, to convert a
large part of the equity in their primary home---into tax free income---yes, tax free!

How do I qualify for a Reverse Mortgage?
It’s simple. All borrowers just need to be 62 years of age, or older, and use their home as their
primary residence. Additionally, all taxes and Insurance must be current on the home.

Why wouldn’t I just get a home equity loan?
Home Equity loans require monthly repayments and a credit qualification. On a reverse mortgage,
there are no monthly or annual repayments and there are no credit qualifications.

I owe money on a first or second mortgage; can I still get a Reverse Mortgage?
Yes, the funds you receive are first used to pay off the existing mortgage.

After getting a Reverse Mortgage, wouldn’t the lender own my home?
No. You retain the title to the property and the lender is not ever added to the deed.

What kinds of homes are eligible for a Reverse Mortgage?
Single-family, two-to-four unit dwellings, town homes, detached homes, condominiums,
planned unit developments, and some manufactured homes.

What kinds of fees are involved obtaining a Reverse Mortgage?
Rest assured that any fees that occur can be paid by the Reverse Mortgage itself, making them no
burden to the borrowers. The costs can be added to the principal and are paid only when
the loan itself is paid. These standard fees are as follows: application fee, origination fee, closing
costs, insurance, and a servicing fee. All are spelled out in your Good Faith Estimate.

So, no closing costs are required to be paid at settlement?
That’s right---they can all be “rolled in” to the total amount of your loan, if you choose.

When will I have to pay the principal and interest costs associated with this loan?
You will never be required to make any principal or interest payments until one of the
following occurs: (a) the last surviving borrower passes away or sells the home; (b) all
borrowers permanently move out of the home; (c) the last surviving borrower fails to live in the
home for 12 consecutive months; (d) you fail to pay property taxes or insurance; or (e) the
property deteriorates beyond normal wear and tear.

How are the interest rates computed for a Reverse Mortgage?
Your interest rate will depend on the specific product you select. For example, HECM plans are all
adjustable rates, based on the one-year Treasury bill, and are adjusted either monthly or annually.
Your counselor will help you in making this decision.

How is the amount of cash for which I am eligible determined?
This is based on a specific formula including: 1) your age; 2) type of Reverse Mortgage; 3) interest
rates; 4) location of the home; 5) appraised value; and FHA's lending limits in your area.

       _____________________________________________________________________________________________ __________________

        Information provided by Cyndi Stephenson, Reverse Mortgage Specialist, at HomeFirst Mortgage Corp. located at 207 South Alfred Street,
            Alexandria, Virginia 22314. Office 703-549-3400; Cell 703-953-5900; Toll Free 800-232-1219; Facsimile 703-534-4119
                        Website or Email:
What if the value of my home decreases before the loan is paid off?
When the loan is repaid, if the value of the home is less than the outstanding balance of the loan,
you nor your heirs will pay back a single dollar of the difference. Conversely, if the home is sold for
more than the outstanding balance---you or your heirs will receive the difference!

So, it is not possible for my repayment amount to be greater than the value of my home?
You or your heirs can never owe more than what your home is worth at the time the loan is repaid.

Reverse Mortgages are referred to as a “non recourse” loan. What does this mean to me?
This means that the lender can only derive repayment from the proceeds of the sale of the
property. They cannot seek repayment from any of your other assets---or from your estate.

What are the tax consequences for a Reverse Mortgage loan?
Reverse Mortgage loan proceeds are not taxable, no matter how you receive them. If you decide
to pay off the loan during your lifetime, the interest incurred is deductible, by you! If it is paid by
your heirs---it is deductible, by them!

What about my Social Security benefits and Medicare?
Regular Social Security or Medicare benefits are not affected by a Reverse Mortgage. You
should contact your local benefits program administrator regarding your own situation.

Are there any limits on how I use the money I receive from a Reverse Mortgage?
You can use it for anything at all (a cruise, home repairs, Long Term Care insurance and etc.)

I have heard there is a mandatory counseling session---what does this mean to me?
This is a feature designed by the Federal Government for your protection. A counselor, from
an independent government-approved agency, will explain each of your Reverse Mortgage
alternatives and the total costs associated with them. They will also inform you of any other
government programs for which you may qualify. This free session can be conducted in
person or via telephone.

Do you mean they can actually calculate the total costs of the loan— before I obtain it?
Yes, they will print something called the Total Annual Loan Cost (TALC) sheet which
combines all of the costs of a Reverse Mortgage into a single annual average rate. You will
also receive an amortization chart, just as you would with any mortgage.

Do I need to take the money all at once?
No, depending on the type of Reverse Mortgage you select, the cash you get from a Reverse
Mortgage can be paid to you in several ways. And---if your situation changes---you can always
restructure it!
    all at once, in a single lump sum of cash;
    a regular monthly cash advance;
    a "credit-line" account; or a combination of these alternatives .

Let’s say I choose the line of credit option. Do I have to use up my entire line of credit?
No, you do not have to use it up---and the unused portion grows over time, at a guaranteed
rate----continually increasing the amount of cash available to you---at no cost to you!

       _____________________________________________________________________________________________ __________________

        Information provided by Cyndi Stephenson, Reverse Mortgage Specialist, at HomeFirst Mortgage Corp. located at 207 South Alfred Street,
            Alexandria, Virginia 22314. Office 703-549-3400; Cell 703-953-5900; Toll Free 800-232-1219; Facsimile 703-534-4119
                        Website or Email:
Can you give an example of how the line of credit grows?
Let’s say you have a line of credit for $150,000 and you utilize only $25,000 of it. This leaves a
balance of $125,000. If you do not use the line of credit until one year later, and your “growth rate”
is 6%, your available credit line would be 6% higher. You would then have $132,500 available
versus $125,000! You will be informed of your growth rate before the loan is written.
See the document entitled “ Scenarios” for more examples of guaranteed credit line growth.

How many types of Reverse Mortgages are there?
There are three basic types of Reverse Mortgages:
 Federally-insured Reverse Mortgages. Known as Home Equity Conversion Mortgages
   (HECM), they are insured by the U.S. Department of Housing and Urban Development.
 Government-sponsored Reverse Mortgages. Home Keeper® is Fannie Mae’s conventional
   market alternative to the HECM. It is a government-sponsored program and works like a
   HECM loan in many ways.
 Proprietary Reverse Mortgages. These are privately backed loans which are generally used for
   higher property values than the HECM or the Home Keeper®.

How will I decide?
Your counselor will help you and your loan officer will guide you. Your unique situation will dictate
which loan will best meet your financial goals. Something called the Reverse Mortgage Analyzer
software will compare and contrast the costs and the features of each loan and select the right
loan. You and your loan officer can then do “what if scenarios” with the results of that selection
You will also receive an ammotization chart, just as you would with any loan---so that you can look
out 5, 10, 15 years or more and see the effect that loan will have on your estate.

So,If I take a Reverse Mortgage, I could still have an estate that I can leave to my heirs?
When the outstanding loan balance is paid, any remaining equity belongs to you or your heirs !
You will have the ability to structure your loan so that not only is there an estate to leave to your
heirs----the fact that you are remaining in your home, can actually preserve and possibly enhance
the estate for your heirs!

Are the heirs required to sell the property to repay the Reverse Mortgage loan?
No. Repayment may be accomplished with a traditional mortgage loan---or any other assets.

Won't my heirs object to my "spending their inheritance?"
By working with an experienced Reverse Mortgage loan officer, there is every possibility that you
will not only NOT be spending their inheritance---you will be preserving and quite possibly
enhancing the estate for your heirs! In other words, if the proceeds from these loans are properly
managed, these loans could actually “ease” the burden on the heirs; and potentially offload and
preserve wealth for the heirs. Please go to the document entitled “Scenarios” for examples.

How could a Reverse Mortgage be utilized to offload and preserve wealth for my heirs?
This is a burgeoning concept among financial planners. A wealthy couple withdraws the equity
from their home, reducing the value of their estate. They make a gift of money to grandchildren
through 529 college savings plans----or---as outright annual gifts. They fund an irrevocable
insurance trust that buys more life insurance. The trust keeps the insurance out of their estate.
When the couple dies; their children receive the life insurance proceeds tax free. They then pay
off the Reverse Mortgage and keep the house, or sell the home to pay off the Reverse Mortgage.

       _____________________________________________________________________________________________ __________________

       Information provided by Cyndi Stephenson, Reverse Mortgage Specialist, at HomeFirst Mortgage Corp. located at 207 South Alfred Street,
           Alexandria, Virginia 22314. Office 703-549-3400; Cell 703-953-5900; Toll Free 800-232-1219; Facsimile 703-534-4119
                       Website or Email:
Then a Reverse Mortgage loan is not just for the poor? It could be utilized by all of our seniors?
A Reverse Mortgage, properly written, can enhance the lives of all seniors--and their heirs!

What if my home needs repairs? Could that prevent me from getting a Reverse Mortgage?
As part of the process of getting a Reverse Mortgage a property appraisal is performed by a FHA-
licensed appraiser. The appraiser gives a listing of any repairs that would be required to bring the
home up to FHA property standards. A certain amount of money is then set aside until those
repairs can be performed, usually after the Reverse Mortgage is in place.

It all sounds good, but how safe are they---really?
Today, they have become a very safe income option. Again, the oversight of the Federal
Government provides many guarantees: 1) that the payments that will be made to you; and
2) that you can stay in your home, for as long as you like. Additionally, many more enhancements
and incentives are currently in the works for Reverse Mortgages.

It sounds so simple; but where do I begin the process of obtaining a Reverse Mortgage?
The first step is to sit down with one of our Reverse Mortgage Specialists so that we can gain a
clear understanding of your financial goals. We will be very straightforward with you as to whether
or not we feel that a Reverse Mortgage can actually help you meet those goals

It is important to note that, as one of the premier mortgage brokerage firms in the region,
HomeFirst Mortgage Corp. has a rich and vast array of financial products---so there is absolutely
no reason to take on a Reverse Mortgage loan if it is not 110% right for you!

If you decide that you would like to continue to explore these types of loans , we can assist you in
setting up your free government counseling session. This session will provide you with additional
information on any other programs that might meet your needs. If you decide to move forward with
a Reverse Mortgage, we will assist you in completing an application---then the rest of it is all
coordinated by us---until time for you to go to settlement---in your own home!

One last question— what if I go though the entire process and change my mind?
No problem! You have three (3) days, after settlement, to rescind your decision!

That's it?
That's it! You have spent a lifetime paying for your home. No w it is time for your home to pay
for the time of your life!

             HomeFirst Mortgage Corp . 207 S. Alfred Street, Alexandria, VA 22314 ~ Anita Ennis ~
             301.252.5639 or ~ Licensed by the Virginia State Corporation
                                        Commission License #MC-141

        _____________________________________________________________________________________________ __________________

        Information provided by Cyndi Stephenson, Reverse Mortgage Specialist, at HomeFirst Mortgage Corp. located at 207 South Alfred Street,
            Alexandria, Virginia 22314. Office 703-549-3400; Cell 703-953-5900; Toll Free 800-232-1219; Facsimile 703-534-4119
                        Website or Email:

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