New Changes in Reverse Mortgages
September 19th, 2017, will bring new changes to the HECM Reverse Mortgage Porgram. Stay tuned for the unvailing of these changes which we will post as soon as they are made available to us.
Financial Planners and the new Reverse Mortgage Program
2016 is poised to be a magnificent year for the clients of Financial Planners who learned about the new regulations of the FHA Guaranteed HECM Reverse Mortage Program which was drastically changed in 2015 by the FHA. This year, and in coming years, as more and more Financial Planners learn about the new benefits it provides for their wealthy clients, they will make the move to educate their long term clients on how to properly use this once taboo program for their financial benefit.
The Credit Line feature: First the amount in the Credit Line does not accrue interest to the borrower. However, the balance in the Credit Line has a guaranteed Credit Line Growth Rate, which is equal to the total of the interest rate on the loan. Imagine, placing $200,000 or $300,000 in this Credit Line, and have it grow by roughly 5% a year for 10, 15 0r 20 years! Do the math! This is absolutely unheard of in the financial world today. In the old days, Equity Lines were cut off and closed by he Banks when the values of Real Estate went down, like in 2008. This Credit Line cannot be cut off by the Government, and it cannot be closed either.
FHA's Financial Assessment: March 2, 2015
The Financial Assessment for the Reverse Mortgages has finally been unveiled! It becomes effective on March 2, 2015. Along with an 87 page instructional manual, there is a new 4 page Financial Assessment to prove you can afford to pay your taxes and insurance on your home. Although some Seniors will no longer qualify for the Reverse Mortgage because of their low incomes, or high debts, we are still optimistic we can help most of the Seniors who have a need for this product.
Non Borrowing Spouse Changes to HECM's
As of August 4th 2014, borrowers with a Non Borrowing Spouse (under 62 years of age) will be able to qualify for a Reverse Mortgage. Now, as long as one Senior is at least 62 years of age, He/She will qualify, and the Non Borrowing Spouse will be able to remain in the property after the death of the Borower. Note, the Non Borrowing Spouse does NOT receive any of the other benefits the Borrower has, and those benefits cease upon the death of the borrower.
The 60/40 Regulation on taking your money out.
Borrowers will be limited to using only 60% of the Gross Pricipal Limit (Lending Loan Amount) in the first year. An exeption is when the mandatory payoffs (Payoffs & Closing Costs) exceed the 60% of GPL. In these cases one can take an additional 10% above the Principal Limit to pay off debts like mortgages and closing costs.
Any balances left over the 60%, or 60% plus 10%, can be obtained by the customer after a 12 month waiting period.
For loans at 60% or less of GPL, there new MIP Insurance willbe only .5%, (0.05) vs the current 2.0%. For those taking out more than the 60% of GPL, the new MIP Insurance will be 2.5%.
There will also be new Financial Assessments coming into effect March 2, 2015 which will bring about escrows OR set asides for taxes and insurance, Minimum credit scores for qualifications, and a Residual Income requirement for all loans. You will then have to disclose all your monthly income, and monthly debt, and when subtracted, there will be a minimum residual income requirement to qualify.
I believe most of the Seniors in need of this product will not qualify for a Reverse Mortgage, and may eventually lose or have to sell their homes. This is your Government at work!
For the wealthy individuals, Financial Planners, and CPA's this new criteria will be a windfall. Now their clients can use the Reverse Mortgage as a financial tool and gain even more than before. Most wealthy individuals will qualify, no doubt.
Stay tuned, we will post new criterias as they become available from FHA.
News about Reverse Mortgages in Las Vegas
Effectve April 1, 2013, HUD has cancelled the Standard Fixed Rate Reverse Mortgage Program, for both the Refinance and Purchase Programs. This affects all of us Consulting and Servicing Reverse Mortgages in Las Vegas.
The Credit Line is acrruing at a stagering 4.05% per year, compounded.
Counseling of all applicants is mandated by HUD and it is required to be taken either in person or by phone prior to having a reverse mortgage application taken.
Children and non spouses who live in the property at time of application must go through the HUD mandated Counseling sessions also.
If a client is purchasing a primary residential home, while keeping their old residence as a rental, then the client must show sufficient monthly income to carry their current mortgage, tax and insurance payments plus the new homes taxes and homeowners insurance combined.
Request a copy of our Newsletter on Reverse Mortgages, or ask us a Question which may be concerning you.
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Required Documentation for a Reverse Mortgage:
To facilitate the sales process, please make sure to gather the following information and documents pertaining to your reverse mortgage loan:
- Driver's License (s)
- Social Security Cards, or Medicare Cards
- Current Mortgage statement
- Homeowners Insurance Policy. Proof of payment history for one year.
- Homeowners Association "Ledger" payment History for 24 months.
- Two Month's Bank statements, third month will be asked for in time. All pages, even blank ones.
- Pensions, 401k, IRAs, Brokerage Account Statements to cover three months.
- If home is in a Trust, copies of the Entire Trust, all pages.
- Contract of Sale (Purchases only)
- Death Certificate (if applicable)
- Funds to cover the appraisal and credit report.
- Counseling Certificate to comply with FHA.
Once you are ready to move forward with your mortgage application and have the required documentation, please contact us. We're happy to assist you at every step of the process.
If you have any question or concerns about the Reverse Mortgage Product, the effects on your life, or how it may impact your family, please don't hesitate to contact me. I will be glad to discuss the Pros and Cons of the loan, and how best to help find the best solutions for you.
George Lagarde 702-845-4632 GLagarde@ReverseMortgageLV.com, NMLS#18581