Terms GlossarySteps in the Road to Reverse Mortgage

Qualifications ListRequired Documents

Frequently Asked Questions

Understanding Reverse Mortgages

What is a REVERSE MORTGAGE?

A Reverse Mortgage, otherwise known as a Home Equity Conversion Mortgage, is a special home loan designed to help homeowners convert

their home equity into cash income with no monthly mortgage payments

• Are you at least 62 years old?

• Do you own your property outright, or have significant equity in your home?

• Do you occupy the property as your primary residence?

• Are you delinquent on any federal debt?

• Is your property a single family home, 1-4 unit home, HUD approved condominium, or manufactured home that meets FHA requirements?

• Do you have the financial resources to continue to make payments of ongoing home ownership expenses, such as property taxes and insurance?

• A reverse mortgage can help you maintain your financial independence or improve your quality of life

• It will allow you to remain in your home and keep the title to your property

• The money you receive is tax-free. It is not usually considered income

• Income amounts are less of a consideration in loan approval since there are no payments until the loan ends

• You or your estate will never have to pay back more than 95% of the value of the house

• No payments are required until the primary borrower moves out or passes on

DO YOU QUALIFY? POTENTIAL ADVANTAGES

Terms to UnderstandHUD The Department of Housing and Urban Devel-opment (HUD) is the nation’s agency commit-ted to creating opportunities for quality and affordable homes for all. It’s also the primary agency involved in rulemaking and oversight for HECMs.

CounselingThe federal government mandates that all re-verse mortgage loan candiates must meet with an unbiased HUD-approved counselor before completing a reverse mortgage application to ensure that you have all the information you need to make the right decision before enter-ing into the loan.

HECMA HECM (Home Equity Conversion Mortgage) is a home equity loan that allows borrowers to access a portion of their equity. The loan amount is based on the age of the youngest borrower or eligible non-borrowing spouse, the interest rate, as well as the lesser of the home’s value or sales price, subject to HECM lending limits. They are backed by HUD and the FHA. HECM borrowers can qualify to receive a HECM on their home’s value up to $726,525 (effective January 1st, 2019).

HECM for PurchaseThis option helps you accomplish two goals in the same transaction; purchase a more fitting residence, and obtain a reverse mortgage loan. With the HECM for Purchase reverse mortgage, you provide a down payment using the sale of the previous home or other savings. Many seniors find this option helpful when wanting to purchase a new home that is closer to family, smaller in size, or to accommodate new physical needs related to aging.

Monthly Payments This option allows you to choose a fixed month-ly payment for a specified amount of time. How-ever, you also have the option to receive fixed monthly payments for as long as you reside in the home and comply with the loan terms. The amount received each month will not change, even if the home decreases in value. A monthly payments option is only available on a variable interest rate.

Mortgage Insurance Premium (MIP)This MIP fee is mandatory per HUD and is intended to protect borrowers if the reverse mortgage loan surpasses the amount the house is worth when sold.

Your property is appraised, and the approval process begins. At this stage, you will choose your disbursement option.

An FHA-approved lender will review your situation and determine if you are eligible.

Funds are disbursed via direct deposit or mail, you can live in the home without making monthly mortgage payments, as long as you continue to pay your property taxes and home-owner’s insurance, maintain the home, an otherwise comply with the loan terms.

After closing, the funds are ready to be paid out through the disbursement op-tion you seleected, subject to an initial disbusement limit determined by HUD.

CONGRATULATIONS!

Once qualified, you will receive a list of HUD approved counselors who will assist you and confirm your under-standing of the product.

If the last surving borrower sells or transfers the property, passes away, or does not use the property as a princi-pal residence for more than 12 months, the loan has reached a “maturity event,” meaning the loan comes due and no further funds can be disbursed.

Counseling

Approval

Funding

Using Your Loan

Settling Your Loan

The Road to a Reverse Mortgage

Following this “maturity event,” an appraisal is ordered and the heirs can sell the property, or purchase the property. Borrowers can also pay off the loan in full at any time without penalty.

Educating and Qualifying

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Identity � Full legal name, Social Security

number and birthdate (in some cases, you may be asked to provide a copy of your Social Security card)

� Government-issued photo ID

� Copy of Social Security card

Income Verification � Primary/secondary income

amounts and sources

� Values of bank, retirement, investment and other asset accounts

� Monthly debt obligations

Income/Tax Documents � Asset/bank statements: Most

recent two months’ statements for all accounts listed on the application (include all pages of the statement, even ones that are blank

Credit Verification � items in credit history

Homeowner’s Insurance � Homeowners insurance

information, including agent’s name and phone number

Property Information � Verification that the property

is your principal address � Estimates of annual property

taxes, homeowners insurance and any homeowner’s association dues

HUD Counseling Certificate

� HUD certificate which states that you received information about reverse mortgages

Required DocumentationGather these documents to help make your loan application a breeze!

History of Reverse MortgagesHow long has the reverse mortgage program existed?

The FHA insured Home Equity Coversion Morttgage, or HECM, was signed into law on February 5, 1988 by President Ronald Regan as part of the Housing and Community Development Act of 1987. 1n 1988, HUD gained the authority to insure reverse mortgages, and in 2001 HUD and AARP teamed up to create a HECM counseling program for seniors. The reverse mortgage loan has developed significantly over time.

Cost of a Reverse Mortgage Will the bank own my home?

The bank never owns your home in a reverse mortgage. The homeowner retains title as long as they live in the home, pay taxes and insurance, and maintain the homeaccording to FHA requirements.

Does my home have to be paid off to qualify for a reverse mortgage?

The more equity you have in your home, the more money you can barrow. But it is not necssary to have paid off your original loan amount to securse a reverse mortgage.

Is a reverse mortgage expensive?

The cost of a reverse mortgage may seem inflated because of the FHA insurance, but it is the FHA mortgage insurance that allows for no monthly mortgage payments and protects you from ever owing more on their home than the home is worth.

Counseling CertificateWhat is a counseling certficate?

A Reverse Mortgage Counseling Certificate is the certificate that you receive once you have attended a counseling session conducted by a certified reverse mortgage counselor. The counseling is specific to the program you have selected (whether it be the Government HECM program or one of the private proprietary products available) and can be done either face to face or by phone.

Using the Funds How can I use the money?

The money you receive from your reverse mortgage loan can be used any way you choose, such as making home improvements, medical expenses (including in-home care) and living expenses. There are no limitations or restrictions on how you use the money once you receive the proceeds.

Income QualificationsWhat are the credit and income qualifications?

There are no minimum credit score requirements to qualify for a reverse mortgage loan. However, lenders are required to complete a credit analysis focused on your last 24 month payment history. Because it is required that you maintain property taxes and your homeowners insurance as part of the ongoing agreement of the reverse mortgage, lenders must also check that you meet a minimum residual income as part of the FHA financial assessment guidelines.

Do I have to take the full amount I qualify for?

Reverse Mortgage Loans are not subject to prepayment penalties and therefore you can repay any portion of the excess proceeds you received at closing at any time to lower your balance, or you can choose a line of credit and only advance the portion of funds that you wish at closing.

Social Sucurity and Medicaid Will this affect my Social Security or Medicare benefits?

Proceeds will not affect public ben-efits such as SS or Medicare, but can affect “need based” programs such as Medicaid / Medical. A qualified and licensed loan officer can help you determine how it will affect your current benefits.

Paying it Back If no monthly payments are required, how is my reverse mortgage paid back?

To pay off the loan balance, you or your heirs can sell the home or you can pay the loan balance and keep the home.

We’re Here to Help How do I know if this is right for me?

Loans come in all shapes and sizes and no two are the same! You’ll need to speak with a qualified and licensed loan officer to determine whether a reverse mortgage loan is the best option for you.

Frequently Asked Questions On Reverse Mortgages

Mann Mortgage, LLC. NMLS #2550. A reverse mortgage is a loan the must be re-paid. One borrower must be at least 62 years old. Borrower retains title and the loan is due and payable when the last borrower no longer lives in the home as their primary residence. These materials are not from HUD or FHA and this document was not approved by the Department or Government Agency. Loan guidelines are subject to change. Mann Mortgage, LLC is not endorsed by, nor acting on behalf of or at the direction of, the U.S. Department of Housing and Urban Development, Federal Housing Administration, the Veterans Administration, the U.S. Department of Agriculture or the Federal Government. All programs are subject to credit and income qualification. This is not a guarantee of financing or a firm offer of credit.

What sets Mann Mortgage Apart? We are local! You can meet with us face to face, and we will be here after you get your loan to help with any questions you have. While our interest rates are quite competi-tive, our local customer service sets us apart. From your first phone call until your final signature, our loan officers and processing team are fully accessible whenever needed, day or night, weekday or weekend. To obtain a reverse mortgage, you can’t just go to any lender. Reverse Mortgages are a speciality product, and only certain lenders can offer them.

We understand that mortgages should not be one-size-fits-all; that’s why we work closely with each client to identify the program that best meets their needs and goals. As a result, we enable people from all walks of life to experience a smooth, predictable process that results in the best mortgage for their circumstances – and to have an expe-rienced loan officer with them every step of the way.

Jonathan HughesBranch Manager / Loan Officer

NMLS# 7347

LEWISTON, IDAHO 247 Thain Road, Suite 104Lewiston, ID 83501 208.743.1005