Getting a Reverse Mortgage
Perhaps you’ve already been on line, or you’ve spoken with your friends and colleagues, or you’ve asked about it around town, but you’re just not sure yet.
This is where Signature Reverse Mortgage can help. We give clear and straightforward answers. We’ll help you make a solid decision, based upon YOUR needs and YOUR situation.
Here’s how the process works:
1) Over the phone Interview and Calculations:
Get your questions answered on the spot with our professional advisor staff. The internet only leaves people with more questions. We’ll give you immediate answers!
2) Face to Face Consultation with Signature:
We want to meet with you and do this face to face. Your future is at stake. Surely this deserves more attention than a telephone transaction!
3) Third party counseling:
This is often done over the phone. Our clients tell us that this is a repeat of all the valuable and comprehensive information that we’ve already given them!
4) Face to Face Application:
Have you seen the application packages that our competitors send out? An inch or two of paperwork, and your only contact is over the phone!
At Signature, we bring the application to you, and we’ll fill it in WITH you, and then leave you with the information and disclosures that are required. We’ll even do any copying you might need!
5) Appraisal:
A local appraiser will come out to appraise your home.
6) Underwriting:
We handle all the details.
7) Closing:
The closing can take place at the title company, at Signature’s offices in Bloomfield, in the comfort of your home, whatever works best for you. And I or one of my advisors will be on hand.
8) Follow Up:
This is another area where Signature excels Ask any of our clients whose names are provided: Our follow up is second to none! And considering that questions and concerns always arise, you’ll feel much better since you know us personally, you can always reach us, AND we’re local!
Signature RM:
Your Michigan source for the best, most personal and professional reverse mortgage available!
Reverse Mortgages to the Rescue
For Frank and Carol Rider, a reverse mortgage is providing a cushion, giving their investments time to recover from the bear market. The Riders, both in their early seventies, borrowed about $200,000 against their home in New Mexico. They used the money to pay off their traditional mortgage and to take $1,500 a month for the next 20 years to supplement their pensions and Social Security benefits. “We’re trying to maintain our lifestyle,” says Frank, noting that he and Carol travel extensively year-round.
For Luther and Peggy Combs, their reverse mortgage is a lifeline that saved their home from foreclosure. The Combses, both in their early sixties, had high hopes for a comfortable life when they moved from Chicago to central Florida a few years ago. But Luther lost his job when the economy soured, and the couple found themselves deeply in debt. Although they had to use every penny of their home equity to pay off their bills, the reverse mortgage wiped out their monthly house payments and made it easier for them to sleep at night.
You can take it with you
A reverse mortgage can be a good option for people who want to relocate or move to a smaller home but who don’t want to sink all their cash into a new house or who may not qualify for a traditional mortgage. In the past, the only way they could take out a reverse mortgage was to stay put. But new rules that took effect in January allow seniors to use a reverse mortgage to buy a new home. Say you own a house in Massachusetts worth $500,000 and you want to buy a $400,000 house in Florida. If you were to sell your house and pay cash for your new home, you’d have just $100,000 left to add to your savings. But now you can take out a reverse mortgage on the new home. For example, if you took a $100,000 reverse mortgage on the Florida house, you’d have twice the amount left–$200,000—to add to your savings.
How it works
You must be at least age 62 to take out a reverse mortgage. Plus, your house (current or future) must be your primary residence, and your mortgage must be either paid off or have a small balance. Unlike a traditional loan, there are no income or credit-score requirements, and you may use the money as you wish. The older you are, the higher the appraised value of your home (up to the maximum federal loan limit) and the lower the interest rate, the greater the amount you can borrow. As part of the economic-stimulus package, Congress raised the reverse-mortgage loan limit to $625,500 through the end of 2009. After that, the lending limit reverts to $417,000, unless Congress intervenes. As a rough rule of thumb, a 65-year-old might be able to borrow up to 35% of a home’s value, says Eric Bachman, founder of Golden Gateway Financial, a reverse-mortgage lender in Oakland, Cal. The percentage rises to 45% for a 75-year-old, and 55% for an 85-year-old. (To get a personalized estimate of how much you can borrow, go to www.goldengateway.com.)
You can take your payment as a lump sum, a monthly cash payout, a line of credit held in reserve or a combination of all three. No repayment is due until the last homeowner moves out or dies, at which point the home can be sold to pay off the debt. The loan repayment can never exceed the home’s market value (even if it declines), absolving your heirs of any liability.
High fees
Your personal “bailout plan” won’t come cheap. You’ll pay the usual closing costs, plus loan-servicing fees, an origination fee of up to $6,000 and interest over the life of the loan. But what makes a reverse mortgage really costly is an initial insurance premium equal to 2% of the home’s value (up to the reverse-mortgage loan limit) plus 0.5% per month of the mortgage balance. (The Federal Housing Administration insurance protects you and the lender if your home value declines and ensures that you won’t owe money if the loan balance exceeds the home’s value.)
On a $200,000 loan, the upfront costs could exceed $20,000, says Jeff Lewis, chairman of Generation Mortgage, in Atlanta. So a reverse mortgage makes sense only if you plan to stay in your house for several years. But if you do, now could be a golden opportunity for owners of high-priced homes. Interest rates are at historic lows and loan limits may never be as generous, boosting potential payouts. And, says Lewis, “Once you lock in a reverse mortgage, declining home values don’t matter.”
To view the entire article, go to http://www.kiplinger.com/magazine/archives/2009/08/reverse_mortgage_rescue.html
Signautre RM
Reverse Mortgage Seminar July 16, 2009 at 3pm
At the Troy Community Center
3179 Livernois, Room 302
Troy, MI 48083
Call today to RSVP (248) 406-3213
Signature RM is holding an informative seminar, to help senior citizens make the most of their retirement years.
Some of the challenges seniors face today:
- Nest egg is depleted by recent market events,
- Inflation has damaged your monthly budget,
- Adult children need help,
- Planning is being delayed due to lack of funds,
- You want to downsize but can’t, and your current home is becoming a burden.
No matter your need, the reverse mortgage provides a solid base to help you re-establish your financial well-being.
Take this opportunity to understand the program, and see why it will work for you.
Call 248-406-3213 to sign up now.
If you are unable to attend one of our seminars. Individual presentations can also be arranged.
Sincerely,
Doug Browne
100,000 People can’t be wrong
110,000 People took out a reverse mortgages last year. And with the new higher loan amounts now available, that number is expected to double for 2009. The reverse mortgage has become a viable and integral tool for many retirees as they structure their retirement plans. The NEW LAWS HAVE LOWERED FEES as well. The average client will have fees and closing costs that are the same as traditional mortgages. Call today for more information regarding Reverse mortgages at (248) 406-3213.
Signature RM presents informative seminars geared to help senior citizens map out a plan for their retirement years. Using the Reverse Mortgage as part of a ‘rainy day’ strategy, Signature is helping senior citizens to control their lives, especially in today’s challenging world.
Come join us to learn about this important financial option.
Topics of discussion include:
- Keep your home AND keep your savings.
- Eliminate monthly mortgage payments.
- Receive tax-free monthly cash flow or take a lump sum payment.
- Common misconceptions about the reverse mortgage.
- Impacts on your medicare / medicaid / long term care plans.
Upcoming Reverse Mortgage Seminar Schedule:
July 15, 2009 – Bloomfield Hills, MI
July 16, 2009 – Troy, MI
July 23, 2009 – Commerce Twp, MI
August 5, 2009 – Bloomfield Hills
Call us to register at (248) 406-3213
If you are unable to attend one of our seminars, we can provide a private consultation at your convenience.
Common Myths of Reverse Mortgages
Reverse Mortgages are almost completely misunderstood. Years ago, before Reverse Mortgages were heavily regulated, many private Lenders deceitfully took the title in Seniors homes or had appreciation clauses, in which the lender also took a percentage of the appreciation of the home in addition to the balance owed.
Due to these dishonest practices, the federal and state governments stepped in to regulate Reverse Mortgages and developed new loan programs.
Since the late 1980s, Reverse Mortgages have become the most regulated mortgage loan programs in the country. The distasteful practices of some lenders over twenty years ago have lead to many myths and misunderstandings of today.
These are common myths on Reverse Mortgages:
Myth #1 – The Bank Owns Your Home.
This is the most common misconception. You own your home and keep title as long as you own your home, just as you did or are still doing with your traditional mortgage. Once you permanently move out of your home or pass it on to your estate, the loan must be repaid. A Reverse Mortgage is to be paid when a property is sold. You keep the net proceeds from the sale of the property just as you normally would with any real estate sale. The Bank never wants to own your house.
Myth #2 – You Must Own Your Home “Free and Clear” to Qualify For a Reverse Mortgage.
You need to have equity in your home as it is the equity you are borrowing against. One of the benefits of a Reverse Mortgage is that it can be used to payoff your current mortgage so you can live payment free. You can even use a Reverse Mortgage to purchase a home and live payment free.
Myth #3 – You Won’t Qualify Because of Poor Credit.
A Reverse Mortgage works differently than a traditional mortgage. As you do not make any payments as long as you live in your home, your credit history is not important. You can even use a Reverse Mortgage to pay off a bankruptcy or get out of foreclosure and save your home. More Seniors find themselves in desperate finances than you may think; as fixed income has not been increasing nearly as fast as the cost of health care, electricity, property taxes, home insurance, car insurance, etc., has been rising.
Myth #4 – You Don’t Have The Income To Qualify for a Reverse Mortgage.
Reverse Mortgages work the opposite of traditional mortgages and give you income versus using your income to make mortgage payments. Traditional mortgages require that you have the income to qualify for the loan, as you must make monthly mortgage payments to the Bank to pay the loan back. As you do not make any mortgage payments with a Reverse Mortgage until you leave your home, you do not need income to qualify. With a Reverse Mortgage, the Bank pays you versus you paying the Bank.
Myth #5 – You Will Not Have An Estate Left For Your Heirs After The Reverse Mortgage Is Paid Off.
This situation is almost impossible. The formula used to calculate the Reverse Mortgage loan amount you qualify for was developed by and with the federal government, and is very conservative to insure that this doesn’t happen. Many borrowers first worry about a Reverse Mortgage bleeding the equity in their home dry, later wish they could get more money once they understand the conservative figures. However, these formulas are as a protection for you and the Bank. As Reverse Mortgages are non-recourse loans, you can never owe more than the value of the property.
Myth #6 – If You Owe More Than Your House Is Worth, Your Children Have To Pay It Off For You.
Reverse Mortgages are non-recourse loans as a protection measure for both you and your heirs. Unlike traditional mortgages, where you owe the balance regardless of the value of your home, you and your heirs are never responsible for more than the value of the home no matter how much you owe. The chance that your balance with a Reverse Mortgage will exceed your home value is very unlikely. There would need to be a drastic reduction in property values for this to occur.
Myth #7 – Once You Use Up Your Equity, They Cut Your Payments Off.
It is unlikely that your loan balance will be more than the value of your home. Even if your loan balance is more than the value of your home, the Bank must continue to make payments to you with the government insured Reverse Mortgage programs. If you lived to be 150 years old, or your home became worthless, the Bank is still required to keep making payments to you as long as you live in your home.
For more Information visit us at www.Signature-RM.com or email us at info@Signature-RM.com
Retiring in Michigan
It’s still possible to retire in Michigan. It just takes a few more tools and a little more practicality than before.
Time was when you could chart your retirement course and all the options and decisions were obvious and appealing.
We all know that the landscape has changed however. That’s why more and more seniors are turning to their Michigan real estate to help fund their retirement.
In light of recent market movement, many retirees’ nest eggs have been reduced. In order to prolong the life of their investments, it’s essential that these seniors stop invading their principal, so that their investments and assets can recover.
Now I love my home as much as the next guy, but I realize that a home with a reverse mortgage on it will continue to appreciate: However a liquidated retirement fund will never recover. Using the reverse mortgage, you can keep more money under management, at a time when assets should be preserved.
And the flip side is that you won’t be paupering yourself to pay off a depreciating asset, Michigan real estate.
As for most seniors’ desire to leave a legacy to their kids: First, the kids will be better off with a liquid investment portfolio than an illiquid home to sell into the market. And of course, they’ll still have ownership of the home and its equity for when this market recovers.
A recent client provides a perfect example of the numbers involved here. They hold an investment portfolio worth approximately $450,000. Based on life expectancy and their monthly needs, they’ll burn through their nest egg by the time they hit 87. The problem is that our client’s grandfather lived to be 92, and his father lived to be 90.
Part of the $3000 that my clients draw each month goes towards a $700 mortgage payment. That same $700 per month, left to compound at 5% over 20 years amounts to $287,000. This is money that has been left to grow in the portfolio! This is money that extends their nest egg horizon beyond their life expectancy!
It’s a proven fact, a reverse mortgage will cost less then a used up and exhausted portfolio. And with this strategy, your client will slow the drawdown of their principal to positively impact their net worth and long term financial well-being.
And that means a lot of beautiful days retired in Michigan!
Doug Browne, Signature RM
What is a Reverse Mortgage!
Who’s eligible? Reverse mortgages are loans secured by the home that do not need to be repaid until the borrower dies, sells the home or moves out permanently. To get a reverse mortgage, you must be at least 62 years old and own your home, which must be your primary residence. There are no income requirements. It’s OK to have an existing mortgage, but you must be able to get enough from the reverse mortgage to pay it off. You remain responsible for home maintenance, taxes and insurance.
What’s the process? You need an appraisal and inspection, just as you do for a traditional mortgage. Counseling is mandated for government loans. “It’s important to completely understand how the loan is structured,” says Doug Browne, president of Signature RM in Bloomfield Hills, Michigan.
What are the loan options? There are two basic types of loans: the HECM, which accounts for 90 percent of the market, and private reverse mortgages without federal mortgage insurance. “The HECM is still the gold standard,” says Shelley Giordano of Wells Fargo Home Mortgage. “It’s the most versatile product and best for most people.”
HECM loans are insured by the U.S. government; with a private loan the lenders assume the risk. You can never owe more than the value of the home when it’s eventually sold—if the value declines, the shortfall is covered. The main drawback of a HECM is that the Federal Housing Authority caps the appraisal, which affects the loan amount. Currently, the loan limit differs from county to county, from $200,160 to $362,790, but Congress may raise that to a single national limit of $417,000, or even higher.
Borrowers with more expensive houses sometimes turn to private loans, even though the costs may be higher. Ron and Carolann Borrower of Somewhere, Ariz., wanted to get out from under the weight of their monthly mortgage payment. They turned to Bank of America when they were told that a HECM would give them only about 45 percent of their home’s $540,000 value. “With Bank of America we got about 65 percent,” says Prast, 74, who continues to work part time as an accountant.
How much can you get? That depends on the home’s value, location, interest rates and the age of the younger borrower if there are co-owners. You won’t get anywhere near the appraised value of your house—expect between 50 and 70 percent. What’s more, appraisal and legal fees, origination fees, mortgage insurance premiums and monthly service fees come off the top.
The loan can be taken in a lump sum, as monthly payments, as a line of credit or as a combination of these options. Untapped funds in a line of credit generally increase, allowing homeowners to borrow more money over time.
For more Information visit us at www.Signature-RM.com or email us at info@Signature-RM.com
-
Archives
- August 2009 (1)
- July 2009 (2)
- June 2009 (4)
-
Categories
-
RSS
Entries RSS
Comments RSS
