Pacific International Financial Mortgage Company
Reverse Mortgage Specialist
REVERSE MORTGAGES Answers
1.) All parties on title must be >62 years old, and at least one must occupy the home
a. Creates a life estate that you cannot expire until both parties do.
b. Homeowner remains on title for life of the loan/line
c. Only possible default is if you don’t pay taxes or homeowner’s insurance
2.) Loan does not need to be repaid until last survivor moves out of home for 12 consecutive months or dies
a. At that point the estate has 6 months to pay off loan or sell home to pay off loan
i. Kids can take title by refinancing (if possible) with a new non-reverse mortgage
b. All remaining equity belongs to estate
c. If all equity is used up, NO overage is due by estate – lender will collect from the mortgage insurer as these are non-recourse loans.
3.) Home must either be free and clear or borrower must be willing to pay off all existing liens with the new reverse mortgage
4.) No income or credit qualification is required and it doesn’t matter how many assets you have.
a. Loan-to-value is usually 45% to 65% based on age of younger spouse (both have to be older than 62), current mortgage (if any), appraisal. Is there a calculator?? We use Genworth’s program
5.) Must be SFR, 2-4 unit (must occupy one of the units), condo, townhouse or double/triple wide mobile home built after 1976 on a permanent foundation approved by FHA
6.) All proceeds are tax free. What if you have a zero cost basis?? All Barrowed money is TAX free.
a. Proceeds are seen as a loan advance and do not affect social security payments or Medicare. For SSI or Medicaid or other public assistance, you must check further. It may be a problem, especially if you let monies build up in your bank accounts.
7.) 99% of all reverse mortgages are insured by FHA
8.) Client must pay mortgage insurance premiums (MIP) up front. It is equal to 2% of the loan amount and then 50bps a year on-going. Upfront costs are usually made part of loan.
9.) Loan limits are based on:
a. Age of youngest person on title b.) Current rates c.) Appraisal d.) Government set maximum
10.) Better than a home equity line of credit:
a. No payments are due b.) interest rate frozen c.) No qualifying d.) No foreclosure
i. Certain types of bad credit may exclude you??? NO!
1.) Call for analysis
2.) Take application
3.) Speak to HUD approved Reverse Mortgage Licensed Counselor 800-569-4287
a. www.myreversecounseling.com code = WS100323
4.) Order preliminary title report
5.) After prelim, order appraisal
6.) Closing package goes to escrow
7.) Sign documents at escrow or in front of notary
8.) 3 to 5 days until closing, with 3 day right to rescind
2.) Monthly payment for life
3.) Monthly payment for term certain (maximum? minimum?) very flexible only limited by loan amount
a. Based on age of younger spouse (both have to be older than 62), current mortgage (if any), appraisal
4.) Upfront lump sum (based on same criteria)
5.) Line of Credit (with checkbook)
a. The initial amount is set using same criteria, but nothing is owed until it’s borrowed
b. The unused portion earns interest??? And your line of credit grows??? Look on the Seaton Quote page 6 column 8 Remaining credit line
6.) Combination of the above options
7.) Use cash you have on hand to purchase a new home with a Reverse Mortgage (How does this work)??? Genworth has this program, give me age and value of home I will give answers.
Top reasons seniors need/want money
1.) Get rid of existing mortgage payments, stop foreclosure, bills, home repair/remodeling, drugs, healthcare, surgery, dental, buy life insurance, help family
2.) Dream vacation, buy long-term care, pay someone for in-home care, general living expenses to better lifestyle, education
3.) Really shouldn’t be used to purchase investment products
1.) Payments/lump sum is tax free (considered loan proceeds)
2.) Free information for seniors can be found at National Council on Aging – 800-510-0301 or by downloading their free booklet “Use Your Home to Stay at Home”.
Some lenders charge a monthly servicing fee ($25 to $35) monthly
How much does client pay (vary by program)? YES!
We have flexibility
CHECK WORK SHEET ON SEATON PACKAGE. Page #3
a. Origination fee =
b. Appraisal fee = usually $450
c. Underwriting fee =
d. Servicing fee =
e. Title fees =
f. Mortgage insurance fee =
g. Recording costs =
h. Escrow fees =
i. Other =
j. Other =
1.) How much does agent make in commission (vary by program)? YES I sent some of Genworth’s pricing to you
Types of programs give me a case and I will run it both ways.
1.) Difference between a Saver Monthly cost less get less
2.) Stand Monthly
3.) Etc., etc., etc.,
Doug & Carolyn Wright, Pacific International Financial
Mortgage Company, 703 Concord, Santa Ana, CA 92701
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