More commonly known More commonly known as the Reverse Mortgage as the Reverse Mortgage

The HECM (Home Equity Conversion

Mortgage)

What is a Reverse What is a Reverse Mortgage?Mortgage?A federally insured program that allows home owners the ability to convert a portion of there homes equity into TAX FREE money. This money can be used for ANY purpose, without ever making a mortgage payment.

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Reverse Mortgage Reverse Mortgage BenefitsBenefits• Increase Monthly Cash Flow• Eliminates Mortgage Payment• Replenish Savings• Be prepared for emergencies• Pay off consumer debt• Receive monthly income (tax-free)• Become financially independent• Visit family & friends more often◦ Create investment opportunities

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Is a Reverse Mortgage Safe?Is a Reverse Mortgage Safe?

YES! FHA fully insures the loan and guarantees that no debt ever passes to the heirs, above & beyond what the home is worth.

HUD participates in regulating the program and the industry to protect seniors, therefore, all reverse mortgage applicants must complete a HUD counseling session.

In 2001, Congress passed legislation making Reverse Mortgages a permanent government program.

How is this possible? How is this possible? Up front Mortgage Insurance

Premium Losses to the lender are protected

by insurance and HUD/FHALender is just deferring interest for

a later dateClient benefits by borrowing

homes equity without making a payment

© Al Arciniaga 2008 Telephone (888) 951-3279 5

How Does A Person Qualify?How Does A Person Qualify?

All Persons on Title Must be at least 62 years ageHave Enough Equity in your Home.Home must be Primary Residence.

A Reverse Mortgage has:A Reverse Mortgage has: NO Income Qualifications.NO Income Qualifications. NO Credit QualificationNO Credit Qualification NO Monthly Payments NO Monthly Payments

How a Reverse Mortgage How a Reverse Mortgage WorksWorksMaximum Claim amount is Calculated

by Age, Home Value, and Interest RateBorrow against home equityMust pay off existing mortgage(s)Homeowners Retain Ownership /Title

just like a Regular Mortgage with a Lien.

Requires Reverse Mortgage Counseling by HUD/FHA Approved Counselor

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Reverse Mortgage Reverse Mortgage FactsFacts

Must be first lien / no other liens on property

Leftover home equity goes to owners or heirs

Must be a primary residence property Federal, State or title liens must be paid Not necessary to pay collections at

closing May be in mortgage default or foreclosure

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Reverse Mortgage Reverse Mortgage Example Example

Example:

62 years old, Value $285,000 = $178,125 Principal Loan Limit

75 years old, Value $285,000 = $208,620 Principal Loan Limit

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Typical Retirement AssetsTypical Retirement AssetsTypical Retirement Assets

Home Cash IRA, 401K Stocks, Bonds, Annuities

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HECM Product FeaturesHECM Product Features

Disbursement Options:• Cash at Closing• Line of Credit• Tenure (Fixed for Life)• Term (Fixed for a specific Period)• Combination of these (Note: Borrower may change disbursement options at

any time)

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Other Key FactsOther Key Facts

No monthly payments…Really!Non-Recourse Loan

Lender recovery is limited to the collateral

Borrower must maintain property taxes & homeowners insurance

Interest accrues during the life of the loan

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This is to expensive!This is to expensive!A Common Misconception is that the

Reverse Mortgage is too Expensive. When in fact it is very similar in cost compared to the standard FHA mortgage.

The Fees will be different for each mortgage amount. In order to get an accurate estimate on your fees the best thing would be to meet with us one on one.

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Reverse Mortgage Reverse Mortgage SummarySummary

Eliminate Largest Monthly ExpenseFunds Can Provide a Monthly Income

and or Liquid Reserves for any PurposeReverse Mortgages Money is a Home

Loan:Generally considered State and Federal Tax

Exempt (See your Tax professional for tax advise)

Funds from Reverse mortgages do not effect Social Security or Medicare (Note: Consult the appropriate

government agency for Medicaid monthly asset regulations)

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What's Next? What's Next? Schedule a time to meet (each

situation is unique)Determine homes valueGet a quote of your specific

figures and fees. Determine if it benefits your

situation

© Al Arciniaga 2008 Telephone (888) 951-3279 15

Thanks for Coming!Thanks for Coming!

We will be holding another seminar

In St. George, Wednesday, February 10th, 11:30 @ the Golden Corral

Invite Your Friends and Family!

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