111 Reverse Purchase Mortgages Part 1 of 2

Real News 411

Episodes 111 & 112 – Reverse Purchase Mortgages

A little overdue, but worth the wait. In these two episodes hosts Pat Lynch and Mike Lena interview Harlan Accola, Reverse National Reverse Mortgage Director and Reverse Purchase Mortgage expert from Fairway Independent Mortgage Corporation. Harlan travels the country helping debunk misconceptions and helping educate real estate professionals and consumers on the ins and outs of taking advantage of the equity in your home for purchase. Sit down, strap yourself in, it’s about to get real. This is RealNews411.

Debunk falsehoods that are out in the market. False understandings and old memories of reverse mortgages from decades ago. This should not be considered as the “loan of last result”. Majority of resistance to reverse mortgages is based on false and outdated info. Old reverse mortgages were NOT government backed loans, reverse mortgages of today are fully insured mortgage products. Biggest resistance points to reverse mortgages
Going to lose their house Going to hurt their kids Going to leave their spouse homeless when they die. Think it’s very expensive Many other unwarranted concerns
People overvalue home equity
Past age 62, value of home equity is less important Can use it to diversify your net worth and hedge your investment risk. Your home equity is very illiquid, making it completely unusable. Take a picture of your house, take it to the grocery store and see how many bags of groceries they will send you home with based on the photo.
The only reason to pay off your house is to not have payment, it’s a cash-flow issue, not a net worth issue. 10,000 people turn 62 each day, 40% of those are still making a mortgage payment. What happens to the other spouse when one spouse with a reverse mortgage dies.
Short answer is “nothing” They can live there for the rest of their life, as long as they continue to pay taxes and insurance.
What happens when the last spouse dies?
Sell the house. If there is positive equity, the estate/heirs receive the difference If there is negative equity, the lender takes the house AND the loss There is no recourse on the estate/heirs The debt is owned by the house, not any person
Using equity to pay the mortgage balance, negative amortization Age requirements for reverse mortgage, at least 1 spouse must be 62 years old. No credit requirement for reverse mortgage Just like a forward mortgage or no mortgage at all, you must pay your property taxes. There are jumbo loads available, that are non-FHA, above the $680,000 limit through FHA. Reverse mortgages require a deposit of 2% into the mortgage insurance fund at FHA. Origination fees and other costs are the same as traditional forward mortgages. You do NOT sign over your deed for a reverse mortgage. If a lender or program requires you to sign over the deed, it is NOT a reverse mortgage. Tax deductibility of mortgage interest, recent law changes affect this. Allowed to begin paying off reverse mortgage balance and then later borrow against it, tax-free and without affecting the original terms. The effect of age difference between spouses. How closing costs on reverse mortgages are similar among various lenders. How closing costs on reverse mortgages are different among various lenders. Reverse mortgage for refinance and purchase. 5 trillion dollars in equity for people aged 62 and older. 750,000 homes purchased last year by people aged over 62, less then 3,000 paid for with reverse mortgages, 500,000 financed with forward mortgage. A paradigm switch is necessary. FREE gift of a PDF eBook on reverse mortgages No regrets. Why didn’t I do this sooner? Turning from sceptic to believer.