bocm rev mtg presentation basics and purchase
DESCRIPTION
Reverse Mortgage LendingTRANSCRIPT
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Reverse Mortgage Lending Basics
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Sneak Preview : New Source of Purchase $$$
HECM for Purchase ( H4P )
represents a new source of purchase money not subject to credit, income, or asset qualifiers.....
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What Does This Mean?
Seniors 62 or over are able to purchase real estate by combining a down payment with a reverse mortgage at the closing table....and have no monthly payment
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Rule of Thumb
If customer has a 50% down payment ...
50 % of the rest can be used as financing in the form of a reverse mortgage !
Easy Example: Customer has $150,000 in cash. BOCMbrings $150,000 to table in form of reverse mortgage. Customerpurchases $300,000 home and has no P and I payment.
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Why is Reverse Important to You?Your Realtor/Builder is Focusing On Older Clients...
10,000 Boomers Retire Every Single Day
20% of All Home Buyers are 55 or over
More likely to buy a newly constructed home
77 million boomers retiring for next 18 years
Fun Fact : 3000 Active 50+ Locations Nationwide
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Have Your Attention? Let’s Get Started!
What the heck is a HECM?
The FHA reverse mortgage is named…
Home Equity Conversion Mortgage.
How is the modern Reverse Mortgage different?
Most importantly, in 1989 FHA restructured Reverse Mortgages so that the homeowner retains title to the home. Even the estate does not lose title at loan’s end.
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Most important change....
What is the major safeguard to the Senior who uses a HECM?
The FHA HECM is a non-recourse loan. Should the loan balance exceed the home value, the borrower or his estate is not responsible for the excess loan balance above what home provides at sale.
*No deficiency judgment can be taken against the borrower, or his estate.
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Reverse Mortgage Quick Facts
Qualifications~ No income, asset, credit score qualifiers~ Home value and age determine eligibility {BOTH BWRS MUST BE 62 OR OLDER}
Features~ Homeowner never makes principal/interest monthly payment but may choose to~ Loan proceeds do not affect Medicare or Social Security~ IRS considers reverse mortgage funds “proceeds from loan”
Benefits~ Repayment is not required until the last borrower no longer resides in the home as the primary residence~ Proceeds can be used for virtually anything such as new home, health care, irregularexpenses
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More Refinement : 2010 FHA Creates HECM Saver
At last, the cost of entry can be very low
Since 2008, upfront costs of reverse mortgage have dropped significantly
In 2010, BOCM was one of first in the industry to embrace HECM Saver, a new no-load option
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Let’s Compare : Saver versus HELOC
Ability to Freeze LOC or Call Note
Unused LOC Growth
Government Insured
No Monthly Payments
No Income Qualifications
No Credit Qualifications
Upfront Costs
Interest Rate
HECM Saver HELOC
$2500 $500-$1000
4.06% 3.75%
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How Can Reverse Mortgage Proceeds Be Disbursed?
Lump Sum ~ Pay off existing mortgage on legacy home ~ Provide down payment on PRIMARY HOME, second home or help children purchase
Tenure ~ Guaranteed monthly payment until last borrower exits home
Term ~ Take monthly payment for a limited time
Line of Credit~ Draw growing line of credit as needed for irregular expenses
Any Combination of the Above Options
