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NOTE: *Most reverse mortgage loans today are federally insured through the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) Program. This information is HECM loans only.
**A pre-qualification is not an approval of credit and does not signify that underwriting requirements have been met.
…your customers buy their next home with 45-65% less money up front than if the borrower were to pay the entire purchase price outright. To pay for the down payment, the funds can come from the sale proceeds of their last home, 401k, and other sources that meet the U.S. Department of Housing and Urban Development (HUD) and lender guidelines.
The amount down is figured from several factors: Age of the youngest borrower, current interest rates, and whichever is lesser between the three (appraised value, purchase price, or the FHA lending limit). The H4P loan has no monthly payments, except for taxes, insurance, and general maintenance.
*Source: Moving forward to economic stability, MBA David H. Stevens
Did you know baby boomers are projected to have the largest household growth rate in the next decade with millions of seniors moving into the 60+ age group in the next 10 years1? Since they tend to have fewer obligations than other generations, baby boomers are given the flexibility and freedom of choosing where to live. The H4P program can help them find a home that fits their needs with no monthly mortgage payments, except for taxes, insurance, and general maintenance.
If All Baby Boomers Retire At 62 – 84% Would Be In Jeopardy Of Running Out Of Money At 66 – 50% Would Still Be Likely To Run Out Of Money
With 64% of seniors wanting to lower monthly housing costs4, the H4P loan has no monthly mortgage payments although taxes, insurance and HOA dues (if applicable) must still be paid and the home must be maintained. Funds from your client’s last home sale, 401K and other sources that meet the Housing and Urban Development (HUD) and lender guidelines can be used for the down payment. This loan option can also help your customers buy their next home with 45-65% less money down than if they were to pay for the home outright. The percentage of the down payment required (35-55%) depends on several factors, including the age of the youngest borrower.
*There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes, insurance and maintenance. Credit is subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.
This table shows the estimated funds available from utilizing an FHA-insured reverse mortgage to purchase a home. This information is provided as a guideline and does not reflect the final outcome for any particular homebuyer or property. *The actual reverse mortgage available funds are based on current interest rates, current charges associated with loan, borrower date of birth, the property sales price and standard closing cost. Interest rates and loan fees are subject to change without notice. Following the closing of the home purchase, no further principal or interest payments will be required as long as one borrower occupies the home as their primary residence and adheres to all HUD guidelines of loan. Borrower must remain current on property taxes, homeowner’s insurance, HOA dues, and maintain the property. The cost of any reverse mortgage loan depends upon how long the loan is kept and how much the property appreciates in value. Generally, the effective cost decreases across the life of the loan.
The Certified Aging-in-Place Specialist (CAPS) designation was developed by the National Association of Home Builders (NAHB) Remodelers™ Council, in collaboration with the AARP, NAHB Research Center and NAHB Seniors Housing Council.
A CAPS is a certified professional who has been trained on the unique needs of seniors in order to modify homes for them to live safely and comfortably in their maturing years while still maintaining a familiar environment. A reverse mortgage can be a great source of cash flow to provide the cash they need to fund upgrading their home so they can afford to update their home.
Modernization isn’t the only need for retirees to upgrade, but oftentimes they need to renovate so they can continue to live at home. It’s far more cost effective to live at home and get in-home care than it is to live in a long-term care facility. Medicare will help seniors pay for living in a nursing home, but tends to be a lot harder to get government assistance for upgrading a home.
SOURCE: Home in Retirement: New Freedom, New Choices – A Merrill Lynch Retirement Study conducted in partnership with Age Wave – Page 16)