1. Reverse Mortgages
Sara A. Cornwall
Wells Fargo Reverse Mortgage
Phone: 203-319-5014
or
866-494-1248 ext 5014
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2. What is a Reverse Mortgage ?
Non-recourse loan that enables homeowners age
62 and older to convert home equity into tax free
proceeds.
Interest accrues but no payments are required
until the home is no longer the borrower’s principal
residence.
There are no income, medical, asset or credit
score requirements to qualify.
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3. Common Uses of Reverse Mortgages
Supplement Monthly Income
Estate Planning
Long-Term Care Insurance and In-Home Care
Funding
Retirement Home Purchase
Charitable and Family Gifts
Life Insurance
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5. Eligibility Requirements
Youngest borrower must be 62 years of age or
older
Property must be primary residence
Own home free and clear or use loan proceeds
to pay off all remaining home debts or liens
Agree to attend an informational session with a
HUD approved counseling agency prior to loan
application.
Eligible properties include single family homes,
condos, manufactured homes, one-to-four unit
owner-occupied apartment buildings
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6. Maximum Claim Amount
No set loan-to-value
The maximum loan amount determined by:
Age of the youngest homeowner
Property value of the home
Current interest rate
The FHA loan maximum of $625,500
The older the borrower, the lower the interest
rate, the higher the home value, the more
funds available
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7. Lending Limits
Property value used in the maximum loan amount
calculation is equal to the lesser of the appraised
value of the property or the maximum FHA
mortgage amount ($625,500 through 2009)
Closing costs & repairs funded from the loan
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8. Payment Plan Options
Lump Sum
Monthly Payments
Tenure (equal monthly payments for as long as
property is primary residence of at least one borrower)
Term (level monthly payments for a fixed period of
time)
Line of Credit
Combination of Options
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9. When Does the Loan become Due and Payable?
All the borrowers have passed away or sold the
property
Property is no longer principal residence of at
least one borrower for a period exceeding 12
months
Borrower refuses to maintain property
Borrower does not pay taxes and insurance
Borrower violates any other covenant of the loan
agreement
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10. Repayment of a Reverse Mortgage
Amount due cannot exceed home value
Loan must be repaid in one payment
Usually the loan balance is paid out of the
proceeds from the sale of the home or other means
(personal funds, refinance, etc.)
Limit for repayment is one year
If the balance on the loan exceeds the appraised
value at the time of sale, the shortage is made up.
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11. Dispelling the Myths: The Five Nevers
“Never” impacts Social Security, Medicare or pension
“Never” have to give up title to their house
“Never” owes more than the value of their house
“Never” restrict on how funds are received
“Never” has to move or make monthly payments
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13. Consumer Safeguards
Non-Recourse Loan – you never owe more than the
value of your property
Mandatory Counseling with an FHA-trained outside
counseling agency – usually done on the phone
Capped Interest Rates
Payment Guarantee
No Prepayment Penalty
Three-Day Right of Rescission
Advance Disclosures
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14. Tax Benefits
Payments are not taxable, as they are considered
loan payments not income
Accrued interest payments generally deductible
upon repayment of the loan – check with your
advisor
Lowers estate tax risk
Proceeds do not affect Social Security or Medicare
benefits. May affect other entitlement programs –
check with the agency
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15. Reverse mortgages can help make your retirement
years golden.
golden
Teaming up with Wells Fargo Home Mortgage, the
nation’s leading originator of reverse mortgages, can
preserve and protect your clients’ assets.
Sara Cornwall
Wells Fargo Reverse Mortgage
(203) 319-5014
(866) 494-1248 ext 5014
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