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HOME EQUITY CONVERSION
A
Home Equity Conversion Plan
is for
Smart Seniors
(Your Home is Now Your Savings Account!)
Presented as a service by Karinya
for Senior Financial Corporation
Working Together for Success
Contact us:
Email: Larry and Elvire
Smith
Telephone: 480 899 4463 or 480 899 4474
(For a powerpoint presentation scroll to
the bottom of
the blue form)
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Larry and Elvire Smith
Certified Loan Consultants
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Our Mission
"Improving and Enhancing The Lives of Those We Touch"
This is about little known Home Equity Conversion Plans (HECM)
which are becoming popular in America. The U.S. Department of
Housing and Urban Development (HUD) created one of the first. HUD's HECM is a
federally-insured private plan, and it's a secure and safe plan that can give older Americans
(62+) greater financial security. Many seniors use it to supplement social security, meet unexpected
medical expenses, make home improvements, take a vacation, even purchase another home and more.
Since your home is probably your largest single investment, it's smart to know more about reverse mortgages,
and decide if one is right for you (or a family member, relative or someone you might know who is 62+)! |
We are a HUD Approved Lender, the third largest originator and servicer of
HECM Plans in the Nation, a Standard and Poor's Select Servicer, a Fannie Mae Seller/Servicer, a Member of NRMLA,
and FHA-Insured HECM Plans, and we believe we are the fastest in getting your reverse mortgage funded. We are proud
to offer both the FHA-Insured and Fannie Mae Home Keeper Reverse Mortgage Programs.
The Home Equity Conversion Mortgage (HECM) insurance program, created in 1987 under the National
Housing Act by Congress, is designed to provide elderly homeowners with a financial vehicle to tap the equity
in their homes without selling or moving. The loan became known as a reverse mortgage because
the lender makes payments to the homeowner, which is the
reverse of the payment pattern of traditional mortgages where the homeowner makes payments. Reverse mortgages are
intended to help house-rich but cash-poor seniors access additional income to meet expenses and to help elderly, middle-income
homeowners convert their home equity into liquid assets which they can use for whatever - TAX FREE.
The Federal Housing Administration (FHA) insures HECM loans (Plans) originated by FHA-approved lenders to
protect the lenders against loss if amounts withdrawn exceed ultimate equity when the property is
sold.
What is a HECM Plan?
A HECM Plan is a
special type of Plan that enables Seniors to tap into the equity in their home and receive cash,
a tax-free monthly income, and/or a line of credit, or combinations of these. There are
no income, asset or credit qualifications and there are no monthly payments to make. The Plan is not
repaid until the Seniors permanently leave their home. Reverse Mortgage of America's HECM Plans are
backed by the U.S. Government (HUD/FHA) and Seattle Mortgage a 62 year old major financial institution.
How Do I Qualify?
A HECM Plan is easy to obtain, provided that: (1) The Seniors (and/or their spouse) one of them is at
least 62 years of age or older. (2) they occupy the home as their primary residence, and (3) they have
equity in their home (proceeds of the reverse mortgage can be used to pay off existing liens or
mortgages.)
What Can I Do With the Money?
The Senior can use the money (and are entitled to) from their HECM Plan in any way they choose. For
instance: (1) Supplement their income, (2) Home improvements, (3) Pay off a current mortgage,
(4) Medical expenses, (5) Pay off debt, (6) Buy a new car, (7) Travel, (8) College tution or
gifts to family and (9) even stop a foreclosure. The possibilities are endless. And, the funds are all tax-free.
How Much Money Can I Receive?
The amount of money you receive from a HECM Plan is determined by the home value,
the number and age of the homeowner(s) and the current interest rate from HUD. A representative from
Reverse Mortgage of America will assist in evaluating their options and calculating the
maximum amount of money that will be available to them. |
How Do I Receive My Money? With a HECM Plan, the Senior has five (5) payment options to choose from:
(1) Tenure Option - Receive equal monthly payments for as long asthey occupy their home as their
primary residence
(2) Line of Credit - Draw cash from their HECM Plan whenever and in whatever amount their
choose up to the available limit. Interest is only charged on the funds drawn from the line
of credit.
(3) Lump Sum Cash Advance - They can receive all of their money in a lump sum upon the closing
of the HECM Plan.
(4) Modified Tenure - Set aside a portion of the loan proceeds as a line of credit in addition
to monthly payments.
(5) Term - Receive equal monthly payments for a fixed period of time they select. For instance -
five (5) or ten (10) years.
Or - any combination of the above. They are not locked into a single option - they
may change options as desired.
How is Interest Charged? Interest on a HECM Plan is adjustable and is tied to readily available
market indexes - the T Bill rate. The initial rate is determined at loan closing and adjusts either monthly or
annually. Interest changes do not affect the amount of their monthly check. They are only charged
interest on the Plan balance, which consists of the cash they have received and the financed
closing costs. Interest rates are determined by HUD/FHA.
When Does the Reverse Mortgage Need to be Repaid?
The HECM Plan becomes due and payable when the borrower (Plan Owner) permanently leaves the
home - whether they move, sell or pass away. HECM Plans are typically repaid from the
proceeds of the sale of the home, with any remaining equity staying with the homeowner or their
heirs. However, if the heirs wish to keep the home they do so by refinancing. If a spouse
passes away, the surviving spouse continues to receive the full benefits of the HECM Plan, with no repayment until they decide to permanently leave the home.
Do I Still Own My Home?
Absolutely! The Senior retains full ownership of their home
when they obtain a HECM Plan. As with any mortgage the lender has a loan against the property. Since
the home owner makes no monthly payments, the loan balance increases over time. When the loan is repaid, the
value of the home repays the loan - the home owner and the heirs are not personally responsible
to repay anything.
The loan balance is paid off, which consists of the financed closing costs, the cash advanced
from the HECM Plan and the interest that has accrued. The remaining equity stays with
the homeowner (Plan Owner) or their heirs. If there is not enough equity, HUD makes up the difference.
What is a Counseling Certificate?
Before applying for a Home HECM Plan the Senior is required by HUD to meet with a HUD approved
independent HECM Plan counselor. This FREE session is designed to help them decide
whether a HECM Plan is right for them. The counseling session can be done either in
person or on the telephone, and it is recommended family or trusted friends participate. At
the end of the session you receive a Certificate.
Want More Information?
If you would like more information and to see if you qualify, without any obligation,
please reply to this email by completing the form provided. (Your information is kept secure and
confidential and is not shared. If you wish to contact us confidentially, please email us at
lsmith@karinya.com)
or call us directly at 480 899 4463. Quite a fantastic program we think - Check it out!
CALL: Larry or Elvire Smith 480 899-4474
for a Confidential Telephone Consultation
Find out how many TAX FREE $$$
you
are
enitled to by completing the form on the right
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Common Misconceptions of a Reverse Mortgage
• The bank takes my home!. False. The homeowner retains ownership - full title
in their name. No one can take the home away from the owner.
• I can owe more than my home is worth. False.
The homeowner can never owe more than the current value of
the home at the time of sale.
• If I have poor credit or am in debt I
cannot qualify for a Reverse Mortgage. False. A Reverse Mortgage has no
income, asset or credit qualifications. The only qualifications are that you
must be at least 62 years of age, own and live in the home as your primary
residence and have enough equity built up to qualify.
• My heirs have to pay off the
home when I die. Fact: You and your heirs are not personally responsible to
pay anyhing back - only the home value does this. Your heirs have six months to
settle your estate, and if there is not enough money left - HUD comes in and makes up
the difference.
• There are no responsibilities with a
Reverse Mortgage. False. With a Reverse mortgage you are responsible
for paying taxes and insurance as well as normal upkeep of the property.
You DO NOT make any monthly mortgage payment as long as you remain in the
property as your primary residence no matter how long you live.
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