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March 28, 2014

Today's New Reverse Mortgage Information

Cornerstone Homes partners with Neil Sweren, CRMP to discuss today's new reverse mortgage Neil Sweren is a trusted expert in today's new reverse mortgages for purchases.  Neil speaks frequently at our Lunch & Learn Events for our Own a Villa Today program, and is available to our prospective buyers to discuss new reverse mortgages for purchases. New Reverse Mortgage - Buy your dream home with 50% down and no monthly mortgage payments EVER...   New Reverse Mortgage Frequently Asked Questions: 62 or older? If you are at least 62yrs old and in the market to buy a new home you will want to learn more about the FHA insured (HECM) Reverse Mortgage for Purchase program. In lending circles, we call it the H4P.   What is a HECM? HECM is the government assigned acronym for Home Equity Conversion Mortgage. This is also referred to as a Reverse Mortgage. The terms are for the most part interchangeable. HECM specifically is a reverse mortgage which follows the guidelines issued by and is insured by the Federal Housing Administration (FHA) which is part of the U.S. Department of Housing and Urban Development (HUD). A HECM Reverse Mortgage is a loan. The amount you can borrow is based on property value (or purchase price) and your age. The older you are, the more can borrow as a percentage of the property value. The unique feature of the HECM loan is that it does not require you to make any monthly mortgage payment. You can live in the house as long as you want. Title and full control remains in your name and you are free to sell it whenever you like.   What is H4P? H4P is a HECM (Reverse Mortgage) that is used for the purchase of a home. FHA began allowing use of the program to purchase a home in January of 2009. The amount you need to purchase the house is based on the age of the youngest borrower and the total price of the home. For example, a 65yr old purchasing a $300,000 home would need a total of $149,187 (about 50%) in TOTAL cash and we would finance the rest. Once you make the initial cash investment you are not required to make any additional mortgage payments, you only need to pay your property taxes, homeowners insurance and association fees (if any). That’s it!   Sound too good to be true? Not at all. With a regular mortgage you make payments every month to the lender and when the house is eventually sold, any balance is paid off and you or your heirs keep the difference. With a reverse mortgage there are no monthly payments but we are repaid in full with interest at the end of the loan. When you or your heirs sell the house, the loan balance is paid off and you or your heirs keep any difference. If for any reason your loan balance exceeds the property value, FHA steps in and pays us the difference. You and your heirs are not responsible.   Still not sure you understand? Don’t worry; part of the process is education. We will explain everything in detail and you will also talk with an independent third party FHA approved counselor before moving forward.   - - Neil Sweren, CRMP Certified Reverse Mortgage Professional (443) 738-9121 neil@southerntrust.net
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