Reverse Mortgages

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Reverse Mortgages

• Credit Union Mortgage Association
• 9693-A Main Street
• Fairfax, VA 22031
• [phone]
• www.CUmortgage.net

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A New Kind of Mortgage Loan.. in Reverse
Reverse Mortgages
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What is a Reverse Mortgage?

• A Reverse Mortgage is a unique loan that allows
  homeowners age 62 years and older to convert part
  of the equity in their home into monthly income
  or cash without having to sell the home, give up
  title, or take on additional monthly mortgage
  payments.

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Reverse Mortgages

• No monthly mortgage payments
• No loan repayment until the member moves out
  permanently (sells home, passes away, etc.)
• Member will never have to leave their home

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Qualifications For Reverse Mortgages

• Applicant members must be at least 62 years of
  age
• Must be a homeowner (single family residence,
  condo, townhouse, manufactured housing built
  after June 1976)
• Home does NOT need to be owned FreeClear
• No income or medical requirements to qualify
• No credit or credit score requirements
• Basic qualifications typically require an equity
  position between 30-35

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• Reverse Mortgage loan proceeds are Tax-Free and
  can be paid to the member in several ways
• Single Lump-Sum advance at funding
• Line of Credit allowing members to draw on
  available funds whenever necessary
• Annuity - Fixed regular monthly income payments
  to the member
• OR a combination of ALL the options above
  (Example ½ lump sum ¼ line of credit ¼ monthly
  income/annuity payments)
• Certain tax implications may apply for lump-sum
  payments. Interest may be tax deductible upon
  loan repayment, please consult your tax advisor.

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Uses for Reverse Mortgage Proceeds

• Repay existing mortgages
• Home repair / home improvement
• Pay property taxes and homeowners insurance
• Supplemental retirement income / daily expenses
• Hospital / health care costs
• Preserve home / inheritance for heirs (prevent
  foreclosure)
• Travel / something special (car, RV, ect..)
• Gifts to family members
• Reduce burden on children

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How Much Will a Member Qualify For?

• The amount a member qualifies for depends on
  the following
• Age of the homeowner (in case of couples the
  principle limit is based on the younger of the
  two and both must be 62 years of age or older to
  qualify)
• Appraised value of your primary residence
  Single Family Residence, Condominium or
  Townhouse)
• Geographic location of home due to lending limit
  restrictions
• Current interest rates
• www.CUmortgage.net

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When Do I Pay Back the Reverse Mortgage?

• The Reverse Mortgage is repaid when the member's
  cease to occupy their home as a primary residence
  (sell, move out, pass away, etc.)
• Repayment amount includes principal, accrued
  interest, monthly MI premiums and servicing fees
• No monthly payments are due on a Reverse Mortgage
  while it is outstanding
• Repayment will NEVER exceed the value of the home

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Closing Costs

• Appraisal
• UFMIP - Up Front Mortgage Insurance Premium (if
  applicable)
• Origination Fee
• Title insurance
• Recording fees
• Other typical and customary closing fees
• All closing costs are typically included in the
  loan which means no out of pocket expense

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Myth vs. FactCommon Misconceptions Regarding
Reverse Mortgage Loans

• MYTH The lender takes ownership of the house
• FACT Homeowner retains ownership. The loan is
  secured by a deed of trust or a mortgage just
  like a conventional mortgage, however the
  members DO NOT MAKE PAYMENTS as long as they
  live in the property.

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Myth vs. Fact (contd)Common Misconceptions
Regarding Reverse Mortgage Loans

• MYTH I can be thrown out of my house
• FACT Homeowners can stay in the home until
  they move out of the home permanently (sale,
  death, etc.)
  Please note that it
  is your responsibility to keep the property taxes
  and homowners insurance current on the property

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Myth vs. Fact (contd)Common Misconceptions
Regarding Reverse Mortgage Loans

• MYTH My heirs are or will be against it
• FACT Experience demonstrates heirs, once
  educated on the loan product, are in favor of
  Reverse Mortgages as it allows the family member
  to live in their property without being a
  financial burden on the heirs

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Myth vs. Fact (contd)Common Misconceptions
Regarding Reverse Mortgage Loans

• MYTH I can owe more than my house is worth
• FACT The loan balance will NEVER exceed the
  value of the home. Reverse Mortgages are
  classified as Non-Recourse which means the loan
  payoff can never exceed the value of the home.

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Myth vs. Fact (contd)Common Misconceptions
Regarding Reverse Mortgage Loans

• MYTH The children will lose their inheritance
• FACT Historically, most houses continue to
  appreciate over time. A high percentage of
  houses still have enough equity to pass down as
  inheritance allowing them to sell or refinance
  the home

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Myth vs. Fact (contd)Common Misconceptions
Regarding Reverse Mortgage Loans

• MYTH The loan balance will exceed the property
  value
• FACT If for some reason the loan balance
  exceeds the value of the property the additional
  amount is forgiven and NOT responsible by the
  heirs

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Myth vs. Fact (contd)Common Misconceptions
Regarding Reverse Mortgage Loans

• MYTH Reverse Mortgage loan proceeds/income will
  affect my Medicare/social security income
• FACT Loan proceeds DO NOT affect Social
  Security or Medicare benefits. It is your
  tax-free money to spend as you please.
• 
  Medicaid
  Please consult your tax advisor should you have
  any questions regarding Medicaid benefits.

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Myth vs. Fact (contd)Common Misconceptions
Regarding Reverse Mortgage Loans

• MYTH The costs of a Reverse Mortgage are too
  high
• FACT Compared to other mortgage loans, in many
  instances the benefits will outweigh the costs
  with the members ability to finance all closing
  costs (no out-of-pocket expense). The major
  benefit of a Reverse Mortgage is NOT having a
  monthly mortgage payment, as long as the property
  is occupied as a primary residence. In the long
  term, keeping the Reverse Mortgage for the
  members life, the costs are comparable to
  regular mortgage loans.

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The Potential Growing Market

• 21 million senior homeowners (62 years old)
• 60 of the housing market is 65 - 70 years old
• 85 of these seniors want to remain in their
  homes (AARP study)
• 3 trillion in home equity available and growing
• Loan volume has increased by 70 per year for the
  past two years
• Studies show 93 satisfaction rate with Reverse
  Mortgages

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Members Responsibility

• Keep real estate taxes current
• Maintain homeowners insurance
• Maintain property in good condition
• Use home as primary residence

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Products Available

• FHA/HUD Insured HECM (Home Equity Conversion
  Mortgage).
• Home value limit 362,790
• Fannie Mae HomeKeeper.
• Home value limit 417,000
• Cash Account Advantage.
• Virtually NO home value limit
• Equity choice feature available for credit line
  or cash-out option.

Not all products available in all states
2006 loan limits shown
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Reverse Mortgage Program Contact
For more information please contact our Reverse
Mortgage Specialist Rob Treadway Toll Free
800-231-8855 Ext. 128 Local 703-425-1204 Ext.
128 RTreadway_at_CUmortgage.net www.CUmortgage.net