Reverse Mortgages for PurchaseHow to List and Sell More Homes by way of the HERA of 2008

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What HERA does for Reverse Mortgage

Lowers cost

Prevents coupling Reverse to other products

Raises FHA Lending Limit nationally

Allows for co-op lending for refinance

Allows use of Reverse Mortgage for Purchase

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FHA will allow REVERSE for PURCHASE

For the first time, beginning Jan. 1, FHA will allow the homeowner to come to the table with a significant down payment, combine the down payment with a reverse mortgage lump sum advance, and purchase a NEW home without the nuisance and risk of a monthly payment !!!

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Quick Example

A couple 70 years old comes to realtor having sold their previous home. They have $250,000 in cash to put into buying a new house.

They do not want a mortgage payment.

As a result the Realtor is finding it difficult to find a suitable property for the client.

What can she do?

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Next Step

The Realtor can counsel the client that it would be possible to look at homes much more expensive than $250,000 because FHA is providing seniors, those 62 and over, significant funds that do not require a pay back until the last homeowner dies, moves, or sells.

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Looking at More Properties

The Realtor suggests some other properties . When the clients see one they like, the realtor goes to the reverse mortgage calculator to see if the reverse mortgage plus down payment is adequate to complete the transaction.

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Example

The client sees a house listed for $420,000 that looks quite desirable.

The Realtor inputs both birthdates and home value into calculator.

The reverse mortgage calculator shows what the available lump sum is.

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Must Use BOTH Birthdates

Amount of money based on younger homeowner…Realtor will come up short on down payment needed if this step is ignored

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Enter Data Requested

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Calculate

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What Happened?

Appraised/FHA Lending Limit is $417,000 ( calculation based on)

Purchase Price is $420,000 ( purchase price)

Reverse Mortgage Lump Payout is $255,526 ( minus reverse lump) =

Client needs down payment of $164,474

In other words, with a down payment of $164, 474 a senior couple can combine that with a reverse mortgage, AND HAVE NO MONTHLY PAYMENTS

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What funds are allowed ?

1. Cash from sale of departure home

2. Borrower savings

Applications may not be written until Jan. 1

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What does this mean to you?

Purchase Money available not subject to credit, asset, income verification.

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First and Foremost

1.Realtor can start moving property not suitable for seniors to younger clients.

2.Realtor can up sell options and property to seniors who want to downsize but upgrade.

3.Realtors can amplify income by generating two transactions.

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What Objections Will Clients Have?

“The bank gets the house.”This is the way reverse mortgages worked before FHA restructured them in 1989. Today homeowners retain ownership and the home will remain part of the estate.

“The costs are too high.”The Home Ownership and Housing Recovery Act of 2008 reduced fees for reverse mortgages. In addition, there will be a fixed rate reverse mortgage available for purchase.

“No income, no credit…sounds like a sub prime loan.”Understood. Actually, reverse mortgages are viewed by AARP as an antidote to sub prime lending. FHA itself has increased its market share in the forward world to 40% due to its safeguards for the borrower. And no loan has more safeguards than the FHA Reverse Mortgage: the senior simply cannot lose the house for failure to make a payment as no payment on principal or interest is due until last bwr dies, moves or sells.

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More Objections

“The kids are stuck with the bill.”Actually, if the loan balance exceeds the value of the home, the FHA mortgage insurance pool will cover the deficit. No deficiency judgment can be taken against either the bwr or his estate.

“ The seniors have to move when the loan is due.”Seniors do fear that they might have to move when the loan reaches a certain amount. FHA has addressed this fear by safeguarding the senior and guaranteeing that both seniors can stay in the home as long as they are able.

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What is Potential?

77 Million Baby Boomers

57% of whom wish to move in next 5 years !

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Benefits to Realtor

Two Transactions

Access to younger family members

Up sell

Position yourself as market expert for aging clients

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Ride the Silver Tsunami

Ride the SILVER

Tsunami