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Reverse Mortgages

 REVERSE MORTGAGE – OVERVIEW

 ELIGIBILITY:

  • At least one of the borrowers must be age 62 or older and the property must be their Principal Residence.
  • Loan amount is based on the youngest person’s (on the deed) age, the Property Value and the Interest Rate.
  • The loan amount can range from 52.6% +/- at age 62 to 66% +/- of property value at age 90.
  • The loan becomes due when:
    • The property is no longer the primary residence and occupied by the borrower(s)
    • Borrowers fails to keep the Property Taxes and Homeowners Insurance current.

 PRODUCTS AVAILABLE:

  • FIXED RATE – Loan proceeds can only be taken out one time at settlement as a lump sum disbursement.
  • LIBOR ADJUSTABLE – Loan proceeds can be taken as a lump sum, monthly disbursement or left in an equity line or any combination of the three.
  • Closing costs consists of Mortgage Insurance, Origination Fee and typical costs associated with a mortgage transaction such as Title, Insurance, Doc Stamps, etc.
  • Mortgage Insurance is 2.5% of property value is the initial advance is exceeds 60% of the approved loan amount. If the initial advance is less than 60% that the Mortgage Insurance cost is reduced to 0.5%.
  • FIXED RATE Origination fee can range from $0 to $2,000 depending on the rate of interest, the lower the rate the higher the fee – rates range from 4.75% to 5.18% (not all lenders offer the full range of rates).
  • VARIABLE RATE Origination fee can range from $0 to $6,000 depending on property value.
  • LINE OF CREDIT – Close to 95% of all Reverse Mortgages include a Line of Credit
  • No interest is charged on the unused portion of the Line of Credit
  • The unused portion increases monthly by 1/12 of the Loan Interest Rate plus 1.25% (example a $100,000 left in the Line of Credit where the loan interest rate is 2.75% will increase by $4,000 over the year – 2.75% + 1.25% = 4.0%)

THE PROCESS

We provide an analysis with preliminary information on the loan amount, usually with a comparison of different options (Fixed & Variable) that includes an estimate of the closing costs.

The summary includes information on a Reverse Mortgage FAQ and the HUD required counseling information.

  • The Borrower(s) must meet with a HUD appointed counselor either on a face to face or phone appointment and the lender is required to provide a list of counselors that can do counseling over the phone as well as local counselors who can meet face to face.
  • The majority of counselors charge $125, however there are some that don’t charge and some that will collect payment when the loan settles.
  • A lender cannot recommend a counseling agency. The borrower must make contact to schedule an appointment.
  • Included with the list of Counseling Agencies is a link to a website that contains the same information given to the borrower.
  • Once counseling is completed the borrower is provided a Counseling Certificate - an application cannot be completed until we receive a copy of the certificate signed by the borrower(s).

In most cases the application is done in the borrower’s home on occasions involving the use of a Notary.

At the time of the application the lender may require a credit card authorization to pay for the Appraisal – some lenders have the Appraisal Company obtain the credit card info when they call to schedule the appraisal, which is usually completed in a week to ten days.

Applications are submitted to processing for review and collection of additional information when the file is complete it is sent to underwriting for final review and approval- start to finish is usually 30 days +/-.

Once approved, settlement is scheduled at the borrower’s home. There is a 3 day Rescission Period after settlement before the funds are disbursed.

For more information visit myrmagent.com/fneubauer or call or email Frank Neubauer – 410-707-4577 – frank@fdmhome.com.

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Fidelity Direct Mortgage LLC NMLS #188829
555 Quince Orchard Road, Suite 411, Gaithersburg, MD  20878
Direct:  (301) 869-6000
contact@fdmhome.com
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