Feb 142017
 

Making the decision to do (or not to do) a Reverse Mortgage is a big decision.  Any major financial moves a homeowner makes should be done after careful consideration.  Your loan officer has a fiduciary responsibility to have your best interest at heart.  However, at the end of the day, a loan officer does make money by doing loans, so it’s a good idea to get educated as much as you can via your loan officer, but also to educate yourself by perusing other info provided by a neutral third party that does not benefit from YOU doing a reverse mortgage in California, or any other state for that matter.

HECM Reverse Mortgage Resources

HECM Reverse Mortgage Resources

That’s what we intend to offer here – resources for you to access that are not affiliated with this site or any particular lender.

Before we do that, here is something else to consider as you forge ahead and educate yourself about reverse mortgages.

Is your loan officer a reverse mortgage / HECM specialist?

Is your loan officer a reverse mortgage / HECM specialist OR do they simply do traditional loans and can potentially do reverse loans?  I actually work in a company that mainly focuses on traditional loans.  I manage a division within this company that focusses on Reverse Mortgages.  My staff only does reverse mortgages.  They truly are specialists.  Believe me, before I became a specialist (like when I was just doing traditional loans), you would not have wanted to do a reverse with me. I knew the basics, but not much more, but that was 15 years ago.  Today, I only do reverse loans and I know them well.

How can I tell if I’m working with someone that is well versed in the HECM product?

Frankly, you may not be able to.  Some will tell you that they are well versed in doing them and some will just pretend.  There are a couple of things you can do.  1. Check the website for the company your loan officer works for.  Does it at least have a dedicated page for reverse loans?  If not, the person may not be all that well versed in the reverse loan (naturally, exceptions apply).  2. Look at their resume on the NMLS Consumer Access.  All loan officers are required to get licensed through the National Mortgage Licensing System.  If you go to NMLS Consumer Access, you can see their resume (which includes their job title, time in the business, time with each company, and a list of states they are licensed in and / or were licensed in).  Here is the link; NMLS Consumer Access

The National Council on Aging (aka NCOA):

The National Council on aging is a non-profit organization that was formed in 1950 and is a well-respected national leader that has a website which provides resources geared towards improving the health and economic security of older adults.

Here is a link to the main page for the National Council on Aging.

The NCOA is also a neutral 3rd party.  They do not benefit by you doing a reverse mortgage, so it’s a great place to get non-biased info about reverse mortgages.  In fact, HUD (Reverse Mortgages are insured by HUD / FHA) requires lenders to send a pamphlet about reverse loans from the NCOA in every proposal a lender, loan officer, broker, or counselor sends you (it’s required that you have this packet from either the lender/broker or counselor before you can do your counseling appointment).

Here is a link to the NCOA Reverse Mortgage Info page.

If you’d like a copy of the free NCOA Booklet about reverse mortgages, please send me an email requesting it at shawnv@ReverseMortgageCalifornia.biz or call (714) 271-8524 (cell phone).

HUD / FHA:

This blog / webpage is not affiliated with HUD / FHA.  Reverse Mortgages are neither “endorsed” nor “approved” by the Federal Government. Only a lender and / or broker can originate an FHA loan. The FHA (Federal Housing Administration) simply provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans.  You can find info about the FHA insured Home Equity Conversion Mortgage (Reverse Mortgage) on the HUD portal.

Here is a link for HUD’s Reverse Mortgage Info page.

American Association of Retired Persons (aka AARP):

Like NCOA, AARP is a non-profit organization that was founded in 1958 with the intent to enhance the quality of life for all as they age.  AARP is not a Reverse Mortgage lender, and again, they offer un-biased info about Reverse Mortgages.

Here is a link to their main page; AARP

HUD Reverse Mortgage Counseling:

One of the HUD requirements prior to ordering a case number with the intent to move forward with a reverse mortgage is that an interested homeowner get reverse mortgage counseling from a neutral 3rd party that is not affiliated with any lender or loan broker. 

It’s simply an effort to help ensure that you know what kind of transaction you’re entering into.  

Note: Your loan officer is not permitted to provide you with a specific recommendation.  They are simply supposed to provide a list of eligible counselors.

The opposite is also true; your counselor may not recommend any specific lenders.  Both of the practices are not allowed by HUD.

HECM counselors from the list below can provide face-to-face and telephone counseling nationally.

Agency Name and Website Telephone
National Foundation for Credit Counseling (866) 698-6322
Money Management International (877) 908-2227
ClearPoint Financial Solutions (800) 251-2227
Springboard (800) 947-3752
HomeFree (301) 891-8423
Greenpath (888) 860-4167
Neighborhood Reinvestment Corporation (888) 990-4326

For your free Reverse Mortgage California brochure, please email slvReverseMortgage@gmail.com   OR shawnv@ReverseMortgageCalifornia.biz

Shawn Lawrence Vaillancourt

NMLS License # 387151 in CA, CO, VA, MD, WA, OR

I also have a staff of reverse mortgage specialists in virtually every other state in America.

For more in depth info on all Reverse Mortgage subjects, check out

www.reversemortgagecalifornia.biz 

Reverse Mortgage Info

Jan 242017
 

Are you wondering about your reverse mortgage eligibility?

A reverse mortgage loan can be a great way to subsidize your income as you approach or enter your retirement years.  Before one starts to seriously explore and / or shop for a reverse mortgage, it’s important to ensure that you meet the eligibility requirements in the most basic sense.  That way you’re not wasting your time looking into a product that you don’t qualify to get.

Reverse Mortgage Eligibility

Reverse Mortgage Eligibility

Here are the basics when it comes to who is eligible to get a reverse mortgage.

First and foremost, you have to be aged 62 or older (United States).

Second, there are specific requirements for the collateral (your home).  For example your home must be one of the following to get a reverse mortgage:

  • SFR / Single family residential home.
  • Town home.
  • Condominium with an FHA / HUD approved homeowner association.
  • Double Wide manufactured home (most lenders do this, but not all) built after June 1976.
  • Single Wide manufactured home (very few lenders to this, but there are some out there so if one lender tells you know, move on to the next one) built after June 1976.
  • Modular homes
  • Two to four unit properties.

Thirdly, the home you wish to encumber by a reverse mortgage must be your primary residence.

A fourth eligibility requirement is that there is an equity requirement.  Depending on your age, a reverse mortgage lender can lend anywhere from 52.4% of the appraised value of your home to 75% of the appraised value (it moves on a sliding scale with a 62 year old getting 52.4% and a 90 year old getting 75%).

Frequently Asked Questions About Reverse Mortgage Eligibility

Does every borrower have to be aged 62 or older? Answer à If a couple is married, and one spouse is 62 or older and the other spouse is younger than 62, you can do the loan and both spouses can live in the home until they both pass away or move out permanently.

  1. If my house is free and clear, can I still get a reverse mortgage? Yes, one can still get a reverse mortgage if their home is free and clear.
  2. If I have a loan on my house, can I still get a reverse mortgage? Yes, one can still get a reverse mortgage if they have a loan on their house now (equity requirements apply).

Obviously, there is more to it, but if you meet these very basic reverse mortgages eligibility requirements, there’s a chance this loan might work for you.

For your free Reverse Mortgage California brochure, please email slvReverseMortgage@gmail.com   OR shawnv@ReverseMortgageCalifornia.biz

Shawn Lawrence Vaillancourt

NMLS License # 387151 in CA, CO, VA, MD, WA, OR

I also have a staff of reverse mortgage specialists in virtually every other state in America.

For more in depth info on all Reverse Mortgage subjects, check out

www.reversemortgagecalifornia.biz 

www.reversemortgageloanadvisors.com

Dec 302016
 

When it comes to a reverse mortgage, there are terms that are unique to just the reverse mortgage / HECM program.  The intent of this glossary is not to provide a full mortgage term glossary of terms, but mainly just terms one will encounter as they explore what a reverse mortgage is and what it can do for them.

Reverse Mortgage Glossary

Benefit – The amount of Principal Limit / Funds available to be dispersed to the borrower.

reverse mortgage glossary

reverse mortgage glossary

Counseling – 3rd party counseling is a requirement to do a HECM/Reverse Loan. The counselor’s job is educate the older homeowner in regard to RM’s, to inform them of the alternative options available to their given situation, and to assist in determining which particular HECM product fits their needs.

Durable Power of Attorney – A legal document that enables an individual to designate another person to act on their behalf even in the event the individual becomes disabled or incapacitated.

Expected Interest Rate – Used to calculate how much money the borrower will receive and based on the 10 year LIBOR SWAP rate plus an acceptable margin.

FHA – Federal Housing Administration (a division of HUD) insures lenders against loss in the event that a borrower defaults on their loan.

FHA Case Number – This establishes the FHA connection to the property and this number stays with the property until the loan is satisfied.

Floor – The lowest an interest rate can go.

Forward Mortgage – A traditional mortgage where the borrower makes monthly payments and pays the balance down over time.

Fully Indexed Rate – The note rate that is based on the margin and the index added together

Growth Rate – The rate at which the unused line of credit grows.  On a HECM, it grows at the note rate plus 1.25%.

HECM –  Acronym for Home Equity Conversion Mortgage which is just the FHA version of the Reverse Mortgage.

HECM 60 Fixed – The FHA reverse mortgage that has a note rate that is fixed for the life of the loan.  MIP can vary dependent on the utilization.  If 60% or below, MIP is .5% of appraised value or MCA (whichever is lower).  If above 60% utilization, MIP is 2.5% of Appraisal or MCA.

HECM 60 LIBOR – The FHA reverse mortgage that has a note rate that is adjustable monthly.

HECM 60 Annual – The FHA reverse mortgage that has a note rate that is adjustable yearly.

HUD – Department of Housing & Urban Development.  Works as a lending facilitator and helps borrowers by offering counseling services to potential mortgage clients.

Initial Interest Rate – The actual interest rate on the loan, changes monthly (or yearly on the annual), and is based on the 1 month LIBOR or 1 year LIBOR plus an acceptable margin.

Index – Part of the fully indexed rate.  This is usually a published rate such as the 1 month LIBOR or 1 year LIBOR used on the HECM LIBOR and HECM Annual (respectively).

Incompetent – The inability of a senior to make rational legal, medical or healthcare decisions as determined by a licensed professional or physician.

Irrevocable Trust – A trust that cannot be changed or canceled once it is set up without  the consent of the beneficiary.

Leased Property – The ownership of the land where a structure resides rests with another party not the owner of the structure.

LIBOR – Most common index used on adjustable rate mortgages.  Stands for London InterBank Offered Rate, and is the daily referenced rate based on the rate banks offer to lend unsecured funds to other banks in the London wholesale money market.

Life Estate – The ownership of land for the duration of a person’s life and a legal arrangement where the “life tenant” during his life or her life retains use, possession, and maintenance of the property.

Life Expectancy Set-Aside:  This is money that is set aside from the funds available to cover the cost of the property taxes and/or homeowner’s insurance for the expected life of the loan.

Line Of Credit (LOC)- A reverse mortgage benefit option that allows the borrower to make draws against the equity of their home.  The benefit on this option also has the opportunity to grow larger over time. On the HECM, the unused portion of the LOC grows at the note rate plus 1.25%.

Lump Sum – A reverse Mortgage benefit option in which the borrower receives a large sum of cash upon the closing of the loan.

Manufactured HomeHousing units built in factories and transported to the sites for use.

Max Claim Amount – MCA = the amount of home value used in calculating the Principal Loan Limit on the FHA HECM. It is the lesser of the appraised value or the lending limit for HECM’s (limit is $625,500).

Mobile Home  – Housing units built in factories rather than on site produced prior to the 1976 HUD code enactment.

Modular Homes – Homes built in factories in multiple modules or sections then delivered to their intended site of use and assembled. Modular Homes are considered Single Family Homes.

Mortgage – The document that ties the home as collateral for the note or loan.

Mortgage Insurance Premium – A monthly payment paid by the borrower for mortgage insurance.  On a HECM this is added to the Principal Loan Balance.

Non Recourse Loan- A mortgage in which the borrower is protected by the fact that the home is the only asset that can be used to repay the note.

Note – The terms and conditions of the loan per the terms of the note for the loan.

Note Rate – The actual rate of the loan per the terms of the note for the loan.

Origination Fee – The charge for originating the loan.

Pre-Payment – Payment of the mortgage loan before the scheduled due date.

Principal Loan Balance  – The amount used at settlement to pay liens and settlement charges.  When the loan is official, this will accrue interest and grow as servicing fees, any monthly draws, any monthly advances, interest, and monthly mortgage insurance accrue.

Principal Loan Limit – The gross amount a borrower will qualify for with a reverse mortgage.

Principal Limit Lock –  Locks in the clients benefit and is secured from when the client signs application and extends to 120 days past the opening of the FHA case number. The client will receive the best of market from the day they sign or the day they close.

Planned Unit Development (PUD) – A project or subdivision that includes common property that is owned and maintained by a homeowners association for the benefit and use of the individual PUD unit owners.

Rate Cap – The maximum amount an adjustable rate mortgage can adjust up or down.  On a HECM there are no periodic caps on the monthly LIBOR (lifetime cap 10% over start rate) and the annual LIBOR adjusts 1 time per year (lifetime cap 5% over start rate and 2% per year).

Recording Fee – The fee to record all of the mortgage documents with the county where the property is located.

Repair Set Aside – A portion of the principal loan limit withheld until necessary repairs have been completed as a condition of closing the loan.  Once the repairs have been completed and approved, this portion of the Principal Loan Limit will become available to the borrower.

Rescission Period – Federal law provides a 3 day “right of rescission”. This is the option for the client to cancel the contract for the loan without penalty within 3 business days (including Saturdays).

Residual Income – As it pertains to reverse mortgage, residual income refers to the amount of income left over monthly after subtracting the following from your total gross monthly income.  The formula is Gross income – monthly amount for housing expenses (taxes, homeowner insurance, HOA, etc.) – monthly liability payments on credit report (car loans, credit card loans etc.) = your residual income.

Reverse Mortgage – A mortgage in which the borrower makes no payments and the interest is added onto the balance of the mortgage.  The balance will grow until the borrower fully satisfies the loan.

Revocable TrustA trust in which any of its provisions can be changed, or the trust itself can be cancelled at any time by the grantor.

For your free Reverse Mortgage California brochure, please email slvReverseMortgage@gmail.com   OR shawnv@ReverseMortgageCalifornia.biz

Shawn Lawrence Vaillancourt

NMLS License # 387151 in CA, CO, VA, MD, WA, OR

I also have a staff of reverse mortgage specialists in virtually every other state in America.

For more in depth info on all Reverse Mortgage subjects, check out

www.reversemortgagecalifornia.biz 

Reverse Mortgage Advisor

Jan 252014
 

Are you considering using a Reverse Mortgage for your property in California?  Let us help you navigate through the process.  We’ll cover it all, the good, the bad and the ugly.

Let’s face it, California is not a cheap and easy market to live in.  Many pockets of California are among a few of the most expensive markets nationally, so a Reverse Mortgage can be a phenomenal tool to help aging homeowners navigate the waters of their “golden years” in California – The Golden State.

California Reverse Mortgages – The Basics of the FHA insured Reverse Mortgage

reverse mortgage california

Reverse Mortgage California

A very simplistic way to explain a Reverse Mortgage is as follows; for all intents and purposes it works JUST like a traditional mortgage, but there are just a few tiny, key differences.

First, there is an age requirement.  You have to be aged 62 or older to qualify.  If you’re married, we have to base the available loan amount on the date of birth of the youngest spouse.

Second, there is an equity requirement.  As of August 2014, you can get anywhere from about 52.4% – 75% of your homes appraised value with a Reverse Mortgage.  It all just depends on your age.

For your free Reverse Mortgage California brochure, please email shawnv@ReverseMortgageCalifornia.biz

The third and BEST difference (for 99.99% of older homeowners):

It is that there are NO monthly payments due for as long as you live or for as long as you live in your home(The Reverse Mortgage is intended to be used only on your primary residence (although there have been times over the years where it could be done on your 2nd home)).

For many, this type of loan can lift a heavy burden by eliminating any mortgage payments they may currently have. For others that might own there home free and clear, it can infuse a tremendous amount of money into their bank account to be used however they chose.

What would you like a reverse mortgage do do for you? 

This is the most important question you can ask yourself if you or a loved one is considering a reverse mortgage in the great state of California.

Reverse Mortgage Frequently Asked Questions:

What about my property taxes and insurance?

It’s true, there are no monthly mortgage payments due to the bank that services your reverse mortgage loan, BUT keep in mind you will need to pay your property taxes and insurance.  Remember, this is just a loan and you still own your property in the same fashion as if you had a traditional mortgage.  The bank does not go on title at all and you are able to leave your home to whomever you like in your will.

How much money can I get if I do A Home Equity Conversion Mortgage?

Remember, the amount you get is always based on the youngest homeowner.  A 62 year old can get up to 52.4% of their home’s appraised value.  On the other side of the spectrum, a 90

California Reverse Mortgages

California Reverse Mortgages

year old can access up to 75% of their homes value (and this is the maximum loan to value, even if you are older).  The older you are, the more you get and the amount you get moves on a sliding scale from

52.4% to 75% for those aged 62 – 90 years old.  Here are a couple of examples of how much you can borrow based on your age:

62 Years old – 52.4% of appraised value.

68 Years old – 56.2% of appraised value.

74 Years old – 60.6% of appraised value.

80 Years old – 65.7% of appraised value.

86 Years old – 70.9% of appraised value.

Is there ever a time where I will have to pay the loan off or will have to resume making payments?

To be clear, when you do a reverse loan, you are responsible for maintaining insurance and paying your property taxes.  In terms of making a principal and interest payment, you will never have to do that for as long as you live or for as long as you live in your home.  That does not change, even if you did the loan at age 62 and lived to the age of 110.

Am I able to make a payment?

Yes, you can definitely make a payment.  In fact, you can pay any amount you want.  There just no required payment.  If you want make an interest only payment, you can.  If you want to pay $100 per month, you can.  This would just simply keep the loan balance from growing as rapidly.  And of course, it would help you maintain a larger equity reserve for your children (or whomever your heirs might be).  The key with a HECM is that there is total flexibility.  YOU are in charge of your financial destiny.

Will I be able to qualify to get this type of financing?

Reverse Mortgage Brokers California

Reverse Mortgage Brokers California

Here are the basic qualifications:

  • The home has to be your primary residence and cannot currently be done on a 2nd home or rental property.
  • As far as property types go, one can get a reverse mortgage on a double wide manufactured home (has to conform to HUD guidelines), a modular home, a condominium that has an FHA approved homeowner association, a townhome, a single family home, and a 2-4 unit property (you have to reside in one of the units).  HUD does allow it do be done on single-wide manufactured homes, BUT very few lenders actually offer this.
  • There’s the age and equity requirement which we’ve already discussed.
  • Credit guidelines are pretty relaxed.  Credit scores do not matter, but your housing payment history for the last 1-2 years does matter along with your 1 year pay history for your revolving trade lines like credit cards.
  • There are no debt to income requirement, but there are residual income requirement.  Basically, after you add up all the monthly payment that show up on your credit report and monthy property tax and insurance liabilities and utilities, you need to have some residual income left over.  The short version is that if you have a 1 person household, you need to have a little over $500 in residual income and the exact amount varies depending on what part of the country you live in.  If you have a 2 person household, you need a little over $900 in residual income.  Again, the exact amount depends on where exactly you live.
  • Regarding your credit, if it’s been good in the last 2 years and you’ve paid your taxes on time (property taxes), you should have no worries and it will just come down to the age/equity requirement.
  • If your credit is not sterling, you may still be able to do a reverse mortgage, but you may have to set some of the loan proceeds aside to pay your future taxes and insurance.

What steps are involved in getting a Reverse Mortgage in California (or any other state for the matter)??  (The list looks long, but it’s pretty easy)

  1. Do your own investigation and see if you meet the basic age and equity requirements.
  2. Have your loan officer send you a proposal that details all the particulars (interest rates, estimated appraised value, loan amount, loan costs, counseling documents, NCOA booklet, etc.).
  3. Write down any questions you have once you review the package.
  4. If it works for you, set up a counseling appointment.
  5. Ask the counselor to send your loan officer a faxed copy of the counseling certificate (assuming you want to move forward).
  6. Connect with your loan officer to take an application for you to sign and return.
  7. Lenders can order the appraisal when they have a signed application and a signed counseling certificate.
  8. Have a discussion with your loan officer in regard to certain things the appraiser will be looking for when he comes to your home (i.e., do you have smoke detectors, CO detectors, etc.?).
  9. Provide your loan officer with copies of the items he needs to process the loan (i.e. income documentation, mortgage statement, etc.).
  10. Once the appraisal comes back to the lender/broker, hopefully your loan is all processed and ready to go to the underwriter.
  11. The underwriter will have a few conditions which your loan officer and processor will work on (they may need additional things from you).
  12. Get final approval and then sign your final reverse mortgage documents.
  13. Wait out the 3 business day cooling off period.
  14. Your loan funds and you enjoy not having a mortgage payment.

For your free Reverse Mortgage California brochure, please email shawnv@ReverseMortgageCalifornia.biz

Shawn Lawrence Vaillancourt

NMLS License # 387151.  Licensed in CO, CA, WA, OR, MD, VA

(714) 271-8524

For more in depth info on all Reverse Mortgage subjects, check out

www.reversemortgagecalifornia.biz 

Reverse Mortgage Loan Advisors

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