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Connections to our Trusted Resources

Reverse Mortgages Only was built on the “Mom and Dad” model – we treat our borrowers as we would want our parents to be treated. With our own aging parents, we know that Mom and Dad are well served when we can recommended trusted service providers to assist in any aspect of her care and enjoyment of life.

We therefore have built an extensive network of service providers with specialties such as:

  • Estate and eldercare attorneys
  • Tax and financial professionals
  • Remodeling and repair providers
  • Home care providers
  • Durable medical goods
  • Transportation services
  • And others!

We would be happy to connect you with our trusted resources.

 

Links to other websites:

National Reverse Mortgage Lender’s Association (NRMLA)

 

Consumer Financial Protection Bureau

 

California Bureau of Real Estate:

 

National Association for Aging In Place:  Excellent site for education and resources

 

National Council on Aging:

 

COUNSELING PROCESS RESOURCES:

HUD:  Preparing for your Counseling Session

National Council on Aging:  Use your Home to Stay at Home

Glossary of Terms and Concepts

(In alphabetical order):

Appraisal
Available Principal Limit
Cash or Lump Sum Cash Advance
Credit Line or Line of Credit
Closing Costs
Counseling
Credit Line Growth Rate
Debt Payoff
Department of Housing and Urban Development (HUD)
Estimated Home Value
Expected (or Qualifying) Interest Rate
Federally Insured
Home Appreciation
Home Equity
Home Equity Conversion Mortgage (HECM)
Index Base Rate
Initial Interest Rate
Initial Mortgage Insurance Premium
Interest Rate Cap
Lender
Lending Limits
Lien
Loan Amount
Margin
Maximum Principal Limit
Monthly Service Fee
Mortgage Insurance
Net Principal Limit
Origination Fee
Payout Options
Primary Residence
Service Fee
Service Fee Set-aside
Tax and Insurance Set-aside
Tenure
Term

Appraisal – assessment of a home’s value after an approved appraiser’s in-person inspection of the home’s condition.

Available Principal Limit – Maximum Principal Limit minus the Service Set-aside.

Cash or Lump Sum Cash Advance – a type of payment received at loan funding in a single payout.


Credit line (also known as Line of Credit) - loan funds available for you to request on an as-needed basis.  You pay interest only on the funds you withdraw for use.

Closing Costs – costs the homeowner(s)/borrowers pay in order to secure a Reverse Mortgage.   Some of these costs, such as counseling and the appraisal fee, may be paid directly by the borrower, prior to loan funding, often called “out-of-pocket” expenses.  Other costs may include but are not limited to escrow fees, title insurance, notary fees, credit and flood reports, courier fees, recording fees and the loan origination fees.
  


Counseling – mandated by the federal government for all Home Equity Conversion Mortgages (HECM); All prospective Reverse Mortgage candidates must meet with an unbiased HUD- approved counselor before completing a Reverse Mortgage application.



Credit line Growth Rate – the rate at which a credit line grows larger; the credit line grows because you are getting older and therefore eligible for a greater portion of your home’s equity.

Debt Payoff – loans funds that you are using at closing to pay off any prior debt on your home.  See Lien.

Department of Housing and Urban Development (HUD) – the federal agency that oversees the Reverse Mortgage HECM program.

Estimated Home Value – the estimated value of your home at closing.

Expected (or Qualifying) Interest Rate – the interest rate used to determine your loan advances.

Federally Insured – the federal government insures HECM loans, which means that they guarantee payment of any loan default to the homeowner/borrower or to the lender.



Home Appreciation – the annual average rate at which your home’s value grows.

Home Equity – the value of your home based upon its market price/appraised value minus any liens against your home.

Home Equity Conversion Mortgage – designed by the Department of Housing and Urban Development (HUD) and Federal Housing Administration (FHA), this type of Reverse Mortgage is federally insured and regulated;


Index Base Rate – the interest rate of the publicly published financial index upon which the fully indexed rate is based.

Initial Interest Rate – the interest rate charged when the loan begins.

Initial Mortgage Insurance Premium – the upfront HECM mortgage insurance premium, currently set at 2% of the lending limit.

Interest Rate Cap – the rate that your adjustable interest rate can never exceed over the life of the loan.

Lender – the entity that makes the Reverse Mortgage available to you.  Lenders must be approved by HUD in order to offer the HECM loan, and must strictly comply with HUD guidelines.    Lenders have relationships with brokers who are authorized to sell their loan products.  Brokers can represent multiple lenders and may therefore identify the best loan for your specific situation.

Lending Limits – the cap on value used to determine loan proceeds available to a homeowner.  This limit is now set nationally at $625,500.  (historically limits were set by county). Lending limits are used along with your age, the appraised value of the property and qualifying interest rates to determine the loan proceeds available to you.

Lien – a legal claim on a property for payment of debt; a mortgage or equity line is the most common type of lien.

Loan Amount – the monies you are eligible to borrow.

Margin – the fixed rate added to the index base rate to establish the fully indexed rate.  For example, if the lender adds a 2 point margin to the LIBOR rate, then the LIBOR rate at .5 (for this example only) plus a 2 point margin would equal a 2.5 fully indexed rate.

Maximum Principal Limit – the greatest amount of cash you could get in a single lump sum at closing if you pay all loan fees in cash.

Monthly Service Fee – the monthly charge for servicing your loan after closing.

Mortgage Insurance – required for all HECM loans by HUD and is non-negotiable under the loan program.  An upfront mortgage insurance premium is required at loan funding as well as an ongoing monthly premium added via the loan interest rate.  The mandatory insurance protects both the homeowner and the lender.
 
Net Principal Limit – Principle Limit minus Service Set-aside, Origination Fee and Other Financed Costs.

Origination Fee – fee charged by the lender for making the loan available to the borrower (processing and underwriting the application and funding the loan).

Payout Options – loan proceeds can be received in a variety of ways including:  cash/lump sum, tenure, term, line of credit, or combinations thereof.

Primary Residence – the property you occupy for more than 50% of the year.    Only a primary residence can qualify for a Reverse Mortgage.

Service Fee – monthly charge that covers the cost of maintaining the loan, including but not limited to responding to requests for loan proceeds, changing loan payment selections, record keeping and preparing monthly statements.  Service Fees have not been used in NEW loans for many years.  But older loans may still contain provisions for service fees.

Service Fee Set-aside – a pool of money “set aside” from loan proceeds to cover the future costs of monthly service fees charged to the loan.  Borrowers do NOT pay interest on this set-aside pool but cannot access the monies during the life of the loan.  As noted above, Service Fee provisions are not currently used in new loans, but may still exist in older loans.

Tax and Insurance Set-aside – a pool of money “set aside” from loan proceeds to cover future costs of property tax and homeowner’s insurance.  Homeowners can elect to pay taxes and insurance this way OR can self-manage the payment of these charges.

Tenure – a type of payment from loan proceeds giving you an equal monthly payment for as long as you occupy your home.

Term – a type of payment from loan proceeds giving you a requested monthly payment for a requested and fixed period of time.

Why a Reverse Mortgage Loan?

Reverse Mortgages have been around for more than 40 years. But as any 40-something-year-old, they’ve seen lots of changes over time.

How would a Revese Mortgage loan be good for YOU?

You have financial peace of mind and can maintain your independence.
You can live in your home for as long as you choose.
You never make a monthly mortgage payment on the loan (but must continue to pay your property taxes and homeowner's insurance).
You and your heirs have no personal liability for repayment of the loan – only the home can stand for the debt under a “non-recourse” loan.
You retain ownership and control of your home (as long as you comply with the loan terms).
Your loan proceeds are non-taxable.
You decide how to receive your loan proceeds, and can change your election anytime through the life of the loan, before loan proceeds are exhausted. Choose from: lump sum, line of credit, term, tenure, or any combination thereof.
If you elect a credit line, the unused portion of the credit line grows.
You can repay your loan at any time without penalty.

 


Innovative Uses of a Reverse Mortgage Loan

Purchase long term care insurance.

Long term care insurance pays for necessary medical or personal care service provided outside of a hospital setting, such as in a nursing home or the policy holder’s home.  Many financial planners recommend that their clients purchase long term care insurance to help fund prospective medical and care costs.  Typically, Medicare supplemental insurance does not cover the cost of services. 

Using  Reverse Mortgage to pay for long term care insurance can be an important part of asset protection for you and your heirs.

 

Purchase a life insurance policy.

While we have NO connection to the insurance industry (and could not assist you further),  we understand that purchasing a insurance policy with some of the proceeds from your Reverse Mortgage loan could make it possible to maintain some of the legacy you had planned to leave to your heirs.   A properly structured life insurance policy can pay out a benefit to heirs in tax-free dollars.


You can provide your heirs a guaranteed sum, providing greater control of your estate.  This may be especially desirable given the unknown nature of future real estate markets and property value at the time of your passing.

 

Postpone Collecting Social Security

For young retirees, a Reverse Mortgage may be used to supplement income and forestall initiation of social security payments that are then substantially larger at an older age.

 

For example, a borrower who would have been eligible for $1700 monthly social security benefit at age 62 may be eligible for a benefit of $3100 at age 70.  Using a Reverse Mortgage for cash needs during the interim period can be extremely beneficial to the borrower.  While closing costs may seem expensive, the payback period is short (differs in each individual situation) compared to increased Social Security proceeds over a lifetime.

 


How does a Reverse Mortgage differ from a home equity loan?

While both loans enable you to turn equity into accessible dollars, you must make regular monthly payments (as soon as your loan is funded) to repay a traditional home equity loan.  Therefore, you must qualify for the loan based upon your income and credit.  If you fail to make timely payments, your lender can foreclose on you and you can be forced to sell your home.

 

With a Reverse Mortgage, you do not have to repay the loan until you no longer live in the home.  Your income is not considered when qualifying for the loans, although there is a financial assessment to see if you qualify.  You cannot be forced to sell your home if you cannot make a payment since THERE ARE NO REQUIRED PRINCIPAL AND INTEREST PAYMENTS!  But you must always comply with the terms of the loan such as continuing to make property tax and homeowner's insurance payments.

How can we help?

 

Come visit us at:
40 Birch Street, Suite C
Redwood City, CA 94062
   
Call us:
Toll Free:
800-707-7370
Local Phone: 650-591-4400
Fax: 650-257-4865
Send us an email
   



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Reverse Mortgages Simplified

A Reverse Mortgage is a financial tool - a loan - available only to homeowners 62 and older, that allows access to equity in your principal residence which you may have thought was previously inaccessible.  You ALWAYS retain title to your home and share no appreciation with the lender.  You cannot lose your home under normal circumstances, but foreclosure may occur if you do not pay your taxes and insurance and otherwise comply with the loan terms.  

With a Reverse Mortgage, no repayment of principal or interest is required while living in the home (provided you comply with loan terms).  Instead, interest is added to the loan and paid when the house is sold or after you move from the home.  This creates the cash flow often needed to successfully “Age in Place” - remain in your home safely and securely for as long as you wish.


With today’s constantly changing market, Reverse Mortgages are one of the few options available to seniors who want to remain in their homes and need access to equity but may not qualify for a traditional equity line of credit.

There are two general types of Reverse Mortgages loans available in the marketplace -1) those loans backed by the US Government and 2) “proprietary” loans offered by lenders and targeted at higher value properties.

“Proprietary” mortgages are available from only a few lenders at this time – most disappeared in 2007 and 2008.  When more monies became available under the government-backed program, the proprietary Reverse Mortgages became geared to higher value properties.

Currrently, Reverse Mortgages loans available under the Home Equity Conversion Mortgage (HECM) program are backed by the US Department of Housing and Urban Development (HUD) and is insured by the Federal Housing Administration.

In January 2009 the HECM program was expanded to allow eligible borrowers to purchase a new principal residence using a combination of proceeds from a Reverse Mortgage and cash from their pockets.  This program – known as "HECM for Purchase" - made it possible for homeowners to downsize from Mega-Mansion to Cozy-Cottage, often relocating to other geographical areas to be closer to family members.

HECM Reverse Mortgages, whether for equity redemption or purchase, operate under the same HUD guidelines.

Within the HECM offering, there are two categories of Reverse Mortgages loans:  1) those based upon an adjustable interest rate and 2) those based upon a fixed interest rate.  To determine which one may be right for you, there are many considerations including your age, the amount of money you may need to access, the value of your property, your risk tolerance, and more.

Subcategories

Is a Reverse Mortgage right for you?

Every family situation is different.  Consider the following:

What are you trying to accomplish?  

What current mortgages need to repaid?  

What “cash advance” is needed at funding?  

What is your present income?  

What are current and future cash flow needs?