““A Better Life”A Better Life”HUD/FHA Seniors Loan HUD/FHA Seniors Loan

ProgramProgramPresented by

Ken MetcalfSenior Loan Consultant

for

American Pacific Mortgage Company

Corporate: California Department of Real Estate (DRE) License # 01215943 | NMLS #1850

Kenneth M. Metcalf CA DRE  Broker License # 00276581 | NMLS #

235078

Understanding the Understanding the Reverse MortgageReverse Mortgage

Key BenefitsKey Benefits

Can eliminate a borrowers current monthly mortgage payment.

Can provide a line of credit for future periodic use.

Can provide a stable supplemental monthly income.

FHA insured.Credit is not considered.

Why Do a Reverse Why Do a Reverse Mortgage?Mortgage?

Current retirement income is not adequate for desired standard of living.

High costs of medical insurance, healthcare and medications. Desire to travel and do things during

retirement. Excellent means for accessing home

equity without the monthly payments to diminish lifestyle.

How Does the Reverse How Does the Reverse Mortgage Work?Mortgage Work?

Basically, the interest on the borrowed amount accumulates and is added to the principal. Both the accumulated interest and principal are paid back from the sale of the home at a later date.

Unlike a traditional mortgage the borrower has no responsibility to make monthly or periodic payments as with a traditional mortgage.

No repayment is required as long as borrowers occupy the property. However, if borrowers repay any portion of the principal, it will be available for them to borrower again.

Qualification CriteriaQualification Criteria

Borrower's must be at least 62 years old.

Home must be titled in borrowers name or in their trust.

Home must qualify under HUD standards.

Home must have adequate equity based on HUD established county limits.

Qualifying DetailsQualifying Details Counseling Certificate is required by law.

– This is performed through a non-profit company. Counseling takes about 45 minutes and can be done in person or over the phone.

Home will have a HUD appraisal. May require hold-back for maintenance issues. Will require a structural engineer if

manufactured home on permanent foundation.*

*Most, if not all, of the above items may be included in closing costs.

Qualifying ExampleQualifying Example

Age 89 Home Value

$350,000 HUD Value Limit

$417,000 Old Mortgage $ -0- HUD Maximum

Loan Limit $297,850

Monthly payment of $2828 or LOC of $280,083

Age 72/74 Home Value $350.000 HUD Value Limit

$417,000 Old Mortgage

$101,000 HUD Maximum Loan

Limit $250,250 Elimination of

$455.04 mortgage payment and a LOC for $129,058.Additional funds may be available in the future

through the streamline refinance process or changes in the HUD county lending limits.

Primary Types of Reverse Primary Types of Reverse Mortgage LoansMortgage Loans

Annual Adjustable rateMonthly Adjustable rate The amount of principal available to a

borrower is based on the type of mortgage a borrower chooses, age and HUD maximum limits. The monthly adjustable typically provides the greatest amount of money and is the most popular choice among borrowers.

Payment OptionsPayment Options

1. Lump sum to pay off an existing mortgage or for any other reason such as purchasing a new car.

2. Line of Credit similar to an equity line.

3. Monthly fixed payment.4. Combination of 1, 2 or 3. Borrower can change payment options monthly if

they choose for a small fee, typically $20 per change.

More about the Line of More about the Line of CreditCredit

If the borrowers choose the LOC option, they will find that the LOC grows annually. The growth rate is the interest rate charged during the loan. This means that every year the LOC increases allowing more funds to be available to the borrowers in future years.

For example, a typical reverse mortgage may have a 6.5% interest rate during year 1. At the end of the year a $150,000 LOC would then be at $159,750 allowing borrowers to access a little more of their equity.

The fixed monthly payment option already factors in an anticipated growth rate.

Line of Credit IllustrationLine of Credit IllustrationAnnual Growth Rates

$-$200,000$400,000$600,000$800,000

1 4 710 13 16 19

Years

$ A

mou

nt

Home ValueGrowth 4%

LOC Growth at6.5%

Calculating Available Calculating Available FundsFunds

Go to the following web site:– www.kenmetcalf.com– Click on ‘Calculator’– Input items 1 thru 5 and hit

calculate– Hit Loan Summary for better

overview

Drawbacks to Reverse Drawbacks to Reverse MortgageMortgage

Equity in home will diminish with each passing year as interest accumulates. This means less equity in your estate to be passed on to heirs.

Closings Costs include a 2% loan fee, mortgage insurance fee of 2% payable to the federal government, and other normal closing costs.

Interest is not tax deductible until home is sold or paid off.

For most, the benefits far out-weigh the drawbacks.

Commonly Asked Commonly Asked QuestionsQuestions

Do I lose my home once I do a Reverse Mortgage? No, it is still your home and you can sell or refinance at any time. You are still responsible for paying your property taxes, homeowners insurance and normal maintenance.

Do I have to live in the home? You must live in the home for 6 months out of the year. If you don’t live in the home for 12 consecutive months or more you may be required to sell.

Can I rent out the home? No, you cannot convert the home to a rental property.

More questionsMore questions What happens to my remaining equity

when I die or sell? The remaining equity goes to your estate just as it would with a normal mortgage.

What happens if the accumulated principal & interest is more than the value of the home when it is sold? The FHA insurance pays the difference. You or your estate have no responsibility to pay any loss. The reverse mortgage is a non-recourse mortgage. Any other assets you may have are protected because of the FHA insurance.

Thank you for your time

I hope you have a better

understanding of

Reverse Mortgages

Ken MetcalfKen Metcalf

American Pacific Mortgage1-800-266-9010

E-mail: ken ken@kenmetcalf.comWebsite: kenmetcalf.com

Contact me to answer any questions

Don’t go away yet

This is important

Hey! One more thing

Why Choose…Why Choose…

AMERICAN AMERICAN PACIFIC PACIFIC

MORTGAGEMORTGAGE

We are members We are members of…of…

AMERICAN PACIFIC AMERICAN PACIFIC MORTGAGEMORTGAGE

To unlocking your home equity

is the lender of choiceis the lender of choice

We have local representatives who We have local representatives who can meet can meet

with you in your homewith you in your home

We are always available for any local We are always available for any local assistanceassistance

Our agents are Our agents are licensed licensed

by the by the

California California Department Department

of of

Real EstateReal Estate

We are We are experienceexperience

d and d and dedicateddedicated

We are licensed in We are licensed in 18 states and have 18 states and have over 150 branchesover 150 branches

We work “ hands on” to make We work “ hands on” to make sure your reverse mortgage is sure your reverse mortgage is completed as quickly and as completed as quickly and as

efficiently as possibleefficiently as possible

We directly handle and control all We directly handle and control all aspects of the loan processing aspects of the loan processing

functions from the application to functions from the application to closingclosing

Our processing time frame is typically the fastest in the

industry

NO upfront out of NO upfront out of pocket fees!pocket fees!

We are firm in maintaining We are firm in maintaining our policy of requiring…our policy of requiring…

HUD and Fannie Mae HUD and Fannie Mae

have consistently recognized have consistently recognized American Pacific Mortgage for American Pacific Mortgage for our leadership in the reverse our leadership in the reverse mortgage industry, as well as mortgage industry, as well as

for our integrity, knowledge and for our integrity, knowledge and experience.experience.

What have our What have our clients said about clients said about

us…us…

Dear Ken,Dear Ken,

Just a message to repeat how Just a message to repeat how much we appreciated your time much we appreciated your time and concern over our and concern over our introduction to, and your follow –introduction to, and your follow –through on our Reverse through on our Reverse Mortgage arrangements.Mortgage arrangements.

Your thoroughness in walking us Your thoroughness in walking us through all the details and your through all the details and your immediate responses to our immediate responses to our questions whether asked orquestions whether asked or

faxed to you gave us unsurpassed faxed to you gave us unsurpassed confidence in you.confidence in you.

Again, thank you for your concern Again, thank you for your concern and attention to us. It was our and attention to us. It was our pleasure to meet with you and pleasure to meet with you and work with you.work with you.

Sincerely,Sincerely,

Mr. and Mrs. Herbert S.Mr. and Mrs. Herbert S.

My mother, Wilma R., and I want My mother, Wilma R., and I want to thank you for your assistance to thank you for your assistance and patience in completing her and patience in completing her reverse mortgage. reverse mortgage.

Even though the process was Even though the process was initiated in northern California initiated in northern California and then had to be completed in and then had to be completed in southern California, you and southern California, you and your associates handled the your associates handled the details seamlessly. details seamlessly.

She received funding directly to She received funding directly to her bank account right on her bank account right on schedule and with these schedule and with these monthly installments her care monthly installments her care and security are guaranteed. and security are guaranteed.

Thank you again,Thank you again,

David R.David R.

My home, un-mortgaged, was 38 My home, un-mortgaged, was 38 years old and in need of some years old and in need of some upgrading. At 77, I was in need upgrading. At 77, I was in need of some financial upgrading. The of some financial upgrading. The Reverse Mortgage appeared to fit Reverse Mortgage appeared to fit my situation and after reviewing my situation and after reviewing three proposals I chose Ken three proposals I chose Ken Metcalf.Metcalf.

My experience with Ken wasMy experience with Ken was

very professional and everything very professional and everything clearly explained and every clearly explained and every question answered. I chose a line question answered. I chose a line of credit and a modest monthly of credit and a modest monthly cash withdraw. I have used the cash withdraw. I have used the credit line to modernize the credit line to modernize the master bathroom, install master bathroom, install insulated windows and replace insulated windows and replace the 38 year –old furnace and A/C the 38 year –old furnace and A/C units.units.

My monthly statement clearly My monthly statement clearly defines where every dollar isdefines where every dollar is

accounted for-loan balance, accounted for-loan balance, current interest, credit line current interest, credit line balance and the monthly balance and the monthly increase in my net principal increase in my net principal limit.limit.I am a happy client of Ken and I am a happy client of Ken and would recommend him to would recommend him to anyone thinking about a anyone thinking about a Reverse Mortgage.Reverse Mortgage.

Robert C.Robert C.

KenKen

My wife and I applied for a reverse My wife and I applied for a reverse mortgage May of 2003. It was the mortgage May of 2003. It was the best move we ever made. My wife is best move we ever made. My wife is 81 and I am 82. We found that our 81 and I am 82. We found that our fixed income was falling a little short fixed income was falling a little short of meeting with our financial needs of meeting with our financial needs and that our savings would be and that our savings would be depleted in a short time if we did not depleted in a short time if we did not figure a way to bring in some extra figure a way to bring in some extra income. We owned a home but was income. We owned a home but was still making payments on our home still making payments on our home loan. loan.

It only took a short length of time to It only took a short length of time to apply, have our home appraised and apply, have our home appraised and loan approved and we had the funds loan approved and we had the funds available. Now we not only are free of available. Now we not only are free of house payments but have the house payments but have the financial freedom to use the money in financial freedom to use the money in any way we desire, and it’s tax free. any way we desire, and it’s tax free.

So I say to my fellow senior 62 or So I say to my fellow senior 62 or over to go for the gusto and enjoy over to go for the gusto and enjoy yourself, inquire into the Reverse yourself, inquire into the Reverse Mortgage Program.Mortgage Program.

Thank you ever so much, Marty and Thank you ever so much, Marty and RuthRuth

Happy Holidays to All, who Happy Holidays to All, who made my life so much easier. I made my life so much easier. I am enjoying the reverse am enjoying the reverse mortgage and bragging to all. mortgage and bragging to all.

Thank you again!Thank you again!

Sylvia T.Sylvia T.