July 20, 2009|Six Key Questions to Ask When Selecting a Reverse Mortgage Provider

 

 

 

 

 

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The Reverse Mortgage industry has seen a flurry of new products and lenders enter the marketplace recently. So much rapid change and growth over a short period of time can make choosing a lender and determining the best product a daunting task. Stay In-Home Reverse Mortgage is recognized in helping consumers effectively reach their financial goals and has identified six important questions that prospective borrowers should ask companies when discussing reverse mortgages.

 1. Are you a member of the National Reverse Mortgage Lenders Association (NRMLA)? 

 Not all providers are created equal. NRMLA is the industry’s trade group that requires members to follow a best practices model, and code of conduct, when working with seniors seeking information about reverse mortgages. Even though reverse mortgages have numerous built-in consumer safeguards to protect seniors, Stay In-Home Reverse Mortgage continues to be an active member of NRMLA.

 2. Do you offer access to the full range of Home Equity Conversion Mortgages (HECM)?

 With a range of new products and providers, it can be difficult for consumers to determine if their company is providing information on the full menu of product options available. Stay In-Home Reverse Mortgage is aligned to offer you products from the majority of competent lenders nationally. Your Senior Home Advisor is knowledgeable in the whole range of HECM pricing options as well as jumbo products and pricing. Generally speaking, banks can only offer their own products and that limits your options.

3. Can I see the full breakdown of costs, fees, and the amortization schedule for all these products?

 Stay In-Home Reverse Mortgage will provide a complete breakdown of costs and fees for every reverse mortgage option. Our Senior Home Advisors are ready, willing and able to take the time to explain all facets of reverse mortgages and the process for doing the loan.

 4. Do you have protocols to ensure that I’m getting the most appropriate reverse mortgage for me and that I have the opportunity to make an informed decision?

 Reputable providers will have processes to make sure that borrowers understand their choices and that the appropriate loan product is matched to the senior’s needs. For example, at Stay In-Home Reverse Mortgage, our advisors are trained specialists and are committed to providing honest, outstanding service to seniors and the best reverse mortgage products.

5. How long have you worked with reverse mortgages?

 The decline in conventional mortgage production and the sub-prime collapse over the last year have driven brokers and lenders into the reverse mortgage arena seeking new products. As a result, many new and inexperienced lenders and brokers have entered the reverse mortgage market. While greater focus on reverse mortgages is a positive for seniors and the industry, consumers need to be selective and they should work with providers who have an established history and a thorough understanding of reverse mortgages, as well as the unique needs of seniors. Although Stay In-Home Reverse Mortgage has been enhancing senior’s lives since 2006, the core staff has been engaged in the industry since 2004.

 6. What About Other Financial Services?

 Be wary of loan officers that offer to send you to other trusted advisors, i.e. insurance agents, financial planners, etc., once your reverse mortgage is completed. While most loan officers are reputable, some may unwittingly be working with unscrupulous advisors that are only out to “make a deal” at your expense. At Stay In-Home Mortgage, we have a rule that no one is to refer a senior to a third party without the explicit permission and knowledge of the owner, and that each provider has been thoroughly educated. Under no circumstances do we recommend annuities, stock market investments, etc. We only focus on what we know best, reverse mortgages.

 About Stay In-Home Mortgage

 Stay In-Home Reverse Mortgage was specifically formed to assist seniors with making life changing decisions regarding their homes and financial status. We realized early on the importance of seniors having a clear understanding of the reverse product prior to moving forward: hence we strive to inform and educate rather than sell the program benefits. Only when you fully understand the process do we help you determine if a reverse product meets your specific needs. With Stay In-Home Reverse Mortgage, you get a complete picture of what a reverse mortgage can do for you and your family. We guarantee efficient service and take great pride in effective communication, follow-up, and integrity at a pace that is comfortable for you.

Stay In Home Mortgage is currently the largest independent reverse mortgage broker in Washington , Oregon , Idaho , and is also recognized as a Top 25 Reverse Mortgage Provider in other states such as California, Arizona, Nevada, Hawaii, New Mexico, Utah, Florida, North Dakota, Minnesota, Michigan, Alaska and Colorado.

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July 2, 2009 | FHA HECM Fixed Rate Reverse Mortgage or FHA HECM Adjustable Rate Reverse Mortgage? That is The Question.

 

 

 

 

 

Fixed or Adjustable? That is The Question.

Are FHA HECM (Home Equity Conversion Mortgage) Fixed Rate Reverse Mortgages a better deal throughout the years for borrowers based on historical information, as compared to HECM Adjustable Rate Reverse Mortgages at today’s interest rates? Let’s take a closer look.

If you look at historical information for the last 10 years (the average term for a HECM Reverse Mortgage loan is 7 years), the borrower with a HECM LIBOR adjustable rate reverse mortgage would have an average interest rate of 6.29%. This is based off of a LIBOR margin of 3.0 combined with the last 10 year average (3.29%) of the LIBOR Monthly Index, the HECM 1 -month LIBOR. Today the HECM LIBOR 300 (adjustable HECM) has an Initial Interest Rate of 3.31%, however adjustable monthly HECM’s have a lifetime cap of 10% above the initial rate, so the Interest Rate Cap is 13.31%. The lowest HECM Fixed Rate Reverse Mortgage available today is at 5.56%.  Now let’s look at the difference in proceeds between the HECM Fixed and HECM Adjustable programs by using a Reverse Mortgage Calculator:

 Sample Loan Comparison for a 70 year old borrower with a $200,000 home:

                            HECM Fixed         HECM 275          HECM 300     HECM 325

Available            $122, 466.38       $100,000.00    $96,172.03     $91,894.02
After Fees       

As you can see, the HECM Fixed Reverse Mortgage offers borrowers the most money.  If you’re looking to maximize the amount of money that you get out of a HECM Reverse Mortgage, the HECM Fixed Rate is your best bet.  There are some disadvantages of a HECM Fixed Rate Reverse Mortgage. The main shortcoming of the HECM fixed is that it requires borrowers to make a full draw at closing. This means that you begin accruing interest on the full amount of the loan from the very first day. Because of the other options the adjustable rate mortgages allow, which include the line of credit, monthly payments and any combination, interest is not accrued until you actually receive the money. This way, you are only taking money as you need it, preserving more of your equity over time.

 Closed End vs. Open End Credit

Closed End Credit – A loan or extension of credit in which the proceeds are dispersed in full when the loan closes. Borrowers with a closed-end loan will not be able to draw any additional funds unless they refinance. Borrowers may pay back any money they do not want at closing, but they will no longer have access to the money.

Open End Credit (Revolving) – Line of Credit where no restrictions (other than the maximum credit limit) are placed on withdrawals and repayments. Any amount repaid is available for re-borrowing. Borrowers with an open-end loan may make payments, decreasing the outstanding balance and therefore increasing the principal balance available to the borrower for future use.

 Why is the Line Of Credit Option Not Available For The Fixed Rate Program? 

From a secondary marketing perspective, investors are more at risk if a Line Of Credit structure is used, because at the time borrowers draw funds the market rate can be drastically different. This means investors are lending money at “non market” rates. 

·        So, for that issue, the structure of a HECM Fixed Reverse Mortgage must be such that it is a one-time draw. 

·        HUD does not allow for Fixed HECM products from which only a portion is drawn.  In other words, you can’t say “I just want x amount of money.”  What’s left of x has to go on a Line Of Credit, or be disbursed as payments, which is undesirable for investors with a HECM fixed rate. A HECM Fixed Rate Loan with a Line Of Credit is worthless in the secondary market and as such, the pricing makes it worthless to a consumer.

In closing, I encourage you to look at the HECM Fixed when exploring your Reverse Mortgage opportunities. The HECM Fixed Rate provides you the maximum benefit combined with the security of a fixed rate that is not subject to the monthly interest rate adjustments that come with ARM products.

Stay In Home Mortgage is currently the largest independent reverse mortgage broker in Washington , Oregon , Idaho , and is also recognized as a Top 25 Reverse Mortgage Provider in other states such as California, Arizona, Nevada, Hawaii, New Mexico, Utah, Florida, North Dakota, Minnesota, Michigan, Alaska and Colorado.

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June 22, 2009 | FHA HECM Reverse Mortgage Rate Lock Helps Seniors

 

 

 

 

 

 

 

FHA HECM Reverse Mortgage Rate Lock Helps Seniors

Why is the FHA HECM Reverse Mortgage Rate Lock Feature Important to Me?

The Reverse Mortgage rate lock dictates the amount of money you are able to obtain from the equity in your home.  Lenders can set the expected interest rate on the Federally Insured FHA HECM (Home Equity Conversion Mortgage) Reverse Mortgage (variable rate programs only) at the time of the Loan Application, or at closing, whichever brings the lower expected interest rate.  The expected interest rate is not to be confused with the loan interest rate; the expected rate is used solely to determine the loan principal limit (amount available to you).  

In the past, borrowers ran the risk of expected rates rising during that time, potentially reducing the amount of money to them. This rate lock mechanism protects you in a rising rate environment, yet lets you benefit if expected rates are lower at the time of closing. If expected rates decline between the date of application and closing, you can utilize the lower of the two expected rates and receive more money than what was originally quoted. 

What Can I do to Ensure I’m Maximizing the Full Value of My FHA HECM Reverse Mortgage?
If you’re looking into a Reverse Mortgage, you can maximize your benefits by filling out the Loan Application as soon as possible. The expected rate, which determines how much money is available to you, changes every Tuesday. Every Tuesday the amount available to you may change until you fill out the Loan Application. When you sign the Loan Application you lock in the amount of money available to you.  The example below illustrates how the rate can affect the money available to you. 

Jan                  5.75%           $49,851.36

Feb                  5.86%           $47,948.85

March            5.97%           $46,042.84

April              6.08%           $44,233.47

May                6.25%           $40,420.90

As you can see, delaying the process can reduce the amount of money available to you.  In this example, just a .50% increase in the interest rate resulted in a loss of $9,430.46! If you’re currently looking into a Reverse Mortgage I encourage you to contact an Advisor immediately to ensure you’re maximizing the full value.

Please visit us on the web @ www.stayinhome.com

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Locations: 1000 124th Ave. NE, Ste. 200, Bellevue, WA 98005/4955 S. Durango Drive, Ste. 119, Las Vegas, NV 89113