Reverse Mortgages

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Reverse Mortgages Explained
MHQ Financial Services
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Presentation Topics

• What is a reverse mortgage, how does it work?
• How can it help me, what are some common uses?
• What are the costs involved?
• How am I protected?
• Common Misconceptions
• What are my next steps?

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What is a Reverse Mortgage?

• Enables homeowners age 62 and older to convert
  their home equity into income without having to
  sell the home or give up title
• No required monthly mortgage payments to make
  while still in the home
• Loan proceeds are tax-free and may be
  tax-deductible upon loan repayment
• Reverse mortgages are commonly used to payoff
  existing mortgages, eliminating the monthly
  payment obligation

Consult a Financial Advisor or Tax Advisor for
advise on your unique situation.
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How Can I Receive My Reverse Mortgage Loan
Proceeds?
Not all products and loan options are available
in all states
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How Does a Reverse Mortgage Work?

• Loan proceeds available to the borrower are based
  on two main factors
• Age of homeowner(s)
• Value and location of home
• Loan is repaid at permanent move out, and
  repayment never exceeds appraised value of the
  home
• Amount repaid is principal, accrued interest and
  any financed costs

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What are Common Uses for Reverse Mortgages?
Hospital/Health Care Costs Repay Existing
Mortgages Reduce Burden on Children Home
Improvement/Repair Pay Property Taxes Daily
Expenses Travel/Something Special Gifts
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55
50
50
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29
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Reverse Mortgages are Great Options for

• Seniors who do not have enough income to make
  regular mortgage payments
• Seniors who do not wish to make mortgage
  payments, or would like to eliminate that monthly
  payment obligation
• Seniors who could benefit from a stream of income
  during their retirement years
• Seniors who are finding out that traditional
  retirement income sources (IRAs, pensions,
  401(k)s, Social Security) arent sufficient to
  cover everyday living expenses and healthcare
  needs

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What are the Typical Costs Involved?

• Borrowers are responsible for closing costs
• All closing costs can be funded directly through
  the loan
• Closing costs are similar to those of any other
  mortgage loan
• Typical Loan Closing Costs Include
• Appraisal
• Title search and insurance
• Recording fees and mortgage taxes
• Other typical and customary closing costs

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What are My Responsibilities?

• Keep property taxes current
• Keep Home Owners Insurance current
• Maintain property in reasonable condition

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How am I Protected?

• Reverse Mortgages are Non-Recourse loans
  (borrower can never owe more than the appraised
  value of the home at time of repayment)
• Advance Loan Disclosures and Loan Illustrations
  are provided at time of application
• Counseling is required for all Reverse Mortgage
  Applicants provided by HUD, AARP and other
  reputable organizations

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Most Common Reverse Mortgage Misconceptions

• I can be thrown out of my house or The Lender
  will take my home
• False, homeowner can stay in home until a loan
  maturing event occurs
• Homeowners retain title to the home throughout
  the loan
• I can owe more than my home is worth
• False, homeowner can never owe more than the
  appraised value of the home at the time the loan
  is paid off.
• My heirs will be against it
• False, experience demonstrates many heirs are
  generally in favor of Reverse Mortgages, and
  there are compelling estate planning values to
  these loans

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Reverse Mortgages and Home Equity
Borrowers or heirs typically retain some equity
at loan maturity
Home value
Rising loan balance
10 years
20 years
30 years
40 years
Closing
Results will vary for each customer.
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Common Questions and Answers

• Question Are borrowers limited on how they can
  use the money they receive from a reverse
  mortgage?
• Answer No, the money can be used in any way
  they like. Common uses are home modifications,
  healthcare, paying off existing mortgages and
  supplemental income.
• Question How much money will be owed when the
  loan has to be repaid?
• Answer The total amount borrowed, which
  includes any accumulated interest, mortgage
  insurance premiums, financed origination fees and
  closing costs will be owed at time of repayment.

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Common Questions and Answers

• Question When does the loan have to be repaid?
  
• Answer If all borrowers move out of the home
  for more than 12 consecutive months, sells the
  home or all borrowers on title passes away, the
  loan must be paid off.
• Question Is it required that borrower receive
  counseling before getting a reverse mortgage?
• Answer Yes, counseling is required to ensure
  borrowers are receiving correct information about
  reverse mortgages. Counselors will review loan
  programs, costs and alternative solutions with
  potential borrowers.

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Questions? For more information please contact us
at
MHQ Financial Services 1-888-799-1206