300+ Questions Answered

Examples

Introduction

  • What is a HECM Reverse Mortgage?
  • Why is there such a significant divergence of opinion on the use of reverse mortgages?

In Plain English

  • What should I do first?
  • Suppose I think I can qualify for a HECM, what should I do next?
  • Common Misperceptions
  • Why all the “Bad Press” for Reverse Mortgages?
  • A word (or two) on Income Taxes

Basics

  • How do I know I can handle the risk of a HECM?
  • How do I qualify?
  • What’s counseling?
  • What impact does a HECM have on estate inheritance?
  • How is interest charged on the HECM?
  • What is the Mortgage Insurance Premium (MIP) on my HECM?
  • What can I use the proceeds of a HECM for?
  • Will I lose my Social Security if I get HECM?

Strategies and Usage

  • 25 ways to use a HECM.
  • Other sophisticated ways to use a HECM
  • What are the basic tactics to consider in using a HECM mortgage?
  • Do I need to do this quickly?
  • What are the best HECM financial strategies?
  • Are there any strategies which can limit the high usage Upfront MIP charge?

The HECM Origination Process

  • Can I get a brief outline of the origination and servicing process?
  • Who am I dealing with?
  • How does everybody get paid?

Product Features and Costs

  • Will I be taxed on my HECM proceeds?
  • How much out of pocket money do I need to get a HECM?
  • What are the upfront costs of the loan or the upfront payments?
  • Are HECMs more expensive than regular mortgages or HELOCs?
  • HECMs cost more. But are they good value?

HECM Products and Disbursement Options

  • What products and options are available for you?
  • What property types are eligible?
  • What property types are not eligible?
  • What’s the difference between a HECM and a home equity loan?
  • What type of disbursement is best?

HECM for Purchase

  • Can I get a pre-approval on a HECM before I start to look for a home?
  • What are HECM for Purchase eligible property types?
  • Can I use GAP financing to buy a home with a HECM for Purchase?
  • Is there a right of rescission on a HECM for purchase?
  • Can I have had a bankruptcy and get a HECM?

Product and Pricing Options

  • How do HECM Note Interest Rates work?
  • What product and pricing options meet my circumstances?
  • What is the FHA Expected Interest Rate?
  • What’s the tradeoff between a Fixed Rate and a Variable Rate HECM?
  • What are the components of Fixed Rate Pricing and how does one chose which option?

Non-Borrowing Spouses, Divorces, Marrying or Re-marrying

  • Can a Non-Borrowing Spouse (I.e. a spouse not on the property’s title) be a party to the HECM transaction?
  • What is the FHA rule on Non-Borrowing Spouse Deferral of Due and Payable?
  • Suppose we have a HECM originated before the August 14, 2014, cutoff date, does the Non-Borrowing Spouse have any deferral of Due and Payable or protection?
  • How does the Non-Borrowing Spouse keep the deferral of Due and Payable in place?
  • What if the Non-Borrowing Spouse leaves the property to live in a nursing home?

Borrower Qualifying and Lender Underwriting

  • What types of homes are eligible for the HECM program?
  • If I am permanently disabled, can I qualify?
  • Can someone qualify even if they have an existing mortgage on their primary home?
  • Do all 62-year olds who own their home qualify?
  • What happens if there isn’t enough home equity to qualify?

Borrower Financial Assessment, Credit, Residual Income, and Documentation

  • Do I need a high credit score?
  • What is Financial Assessment?
  • How do we calculate Residual Income?
  • What can we do if we initially do not meet the monthly Residual Income requirements?
  • Can I include overtime, bonus, part-time or seasonal income?

The Appraisal Process

  • What’s different about an FHA HECM appraisal?
  • What are FHA’s Minimum Property Standards?
  • What defects will generally not require repair?
  • What problems will require repairs?
  • What if my appraisal comes in too low?

Borrower Protections and Obligations

  • If I take out a HECM, does the lender or bank own my home?
  • Do I have the right to cancel?
  • Can I ever waive my right to rescind or cancel on my HECM Refinance loan?
  • What are the limits on origination fees charged by lenders to borrowers?
  • What is the “dual compensation” prohibition?

Post Loan Closing Servicing, Defaults, and Remedies

  • What constitutes a HECM Default?
  • What happens if one of us dies?
  • What happens if the last remaining borrower dies?
  • What if one of the co-borrowers has to leave the home and go to a nursing home?

Your family

  • What is the impact of a HECM on estate inheritance?
  • Is it true that my spouse, if she is not on title or relatives must payoff the mortgage to be able to own the home?
  • Should I take my spouse off the title to obtain a larger loan?

Stuff to be Aware of, and Avoid

  • Should I be careful about other products being cross-sold to me?
  • What should I do if I am not certain, but am being pressured by a loan officer or family to take out a HECM loan?

Other FAQ

  • Who else should I talk to before I get a HECM?
  • What’s the best age to take out a HECM?
  • My home is in a living trust; do I qualify for a HECM?
  • Does the growth feature on the credit line mean that I am earning interest?
  • What is a Maximum Claim Amount vs. a Principal Limit?

Advice for Children of Seniors

  • Should my parents Get a HECM?
  • What do people use HECMs for?
  • Will a HECM increase my parents’ monthly expenses?
  • But my parents want to downsize! How can a HECM help them?
  • What help might a HECM provide for a “sandwiched parent”?

History of HECMs

  • The Secondary Market
  • What is the Secondary Market?
  • How does the Secondary Market price impact HECMs?
  • How do the HECMs get sold to investors?

Would you like to learn more?

The “Knowledge Base” has the answers to over 300+ questions you may have on the HECM product.

If you would like to know how much you potentially qualify for, and whether you possibly have adequate monthly cash flow, go to the HECM WIZARD and input your information.

If you would like to reach out and talk with me, fill out the information on Contact Me or email at st.john.bannon@JMCapGroup.com