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Reverse Mortgage - Options

A HECM Reverse Mortgages can be used as refinance vehicle for an existing home that is free and clear or a home with an existing mortgage. The HECM can also be used purchase a home which will not require mortgage payments. The program is available with both fixed and adjustable interest rates.

HECM Refinance to Pay off an Existing Mortgage: A senior can refinance their existing mortgage using a HECM reverse mortgage which is designed to pay off their mortgage and eliminate monthly mortgage payments. The client can now save this cash flow every month, increasing their monthly cash flow and raise their quality of life. The amount of the reverse award used to pay off their existing mortgage is a function of how much equity there is in the home and the age of the youngest borrower. This option is available in fixed rate or adjustable rate formats.

Refinance and Receive a Lump Sum of Cash: This option allows the senior to refinance into a HECM reverse mortgage that will give them a lump sum of cash at closing. This option can be used in combination with paying off their existing mortgage explained above if there is adequate equity available to do so. The amount of the reverse award available to the client is a function of how much equity there is in the home and the age of the youngest borrower. This option is available in fixed rate or adjustable rate formats.

Refinance and Receive a Line of Credit: This option allows the client to refinance into a HECM and structure the reverse proceeds into a GROWING Line of Credit. A unique feature of the HECM Line of Credit option is that the line of credit actually grows every year by a specific growth factor approximately between 3% to about 4% per year. This option can be used in combination with paying off an existing mortgage explained above and also can be structured with a portion of the reverse proceeds in the form of a lump sum. This option is beneficial to clients that may not need or want a lump sum of cash at closing or may just desire a smaller lump sum of cash at closing. Again, the amount of the reverse award available to the client is a function of how much equity there is in the home and the age of the youngest borrower. This option is available in adjustable rate formats only.

HECM Refinance and Receive a Monthly Payments: This option allows the client to refinance into a HECM and structure the reverse proceeds into a monthly payment amount. This option can be used in combination with the Line of Credit option, paying off an existing mortgage and a lump sum of cash at closing explained above. This option is beneficial to clients that may simply want a monthly amount of money and not be bothered with a lump sum of cash or a line of credit. Again, the amount of the reverse award available to the client in the form of monthly payments is a function of how much equity there is in the home and the age of the youngest borrower. This option is available in adjustable rate formats only.

Purchase a Home using a Reverse Mortgage

While the typical retiree uses a HECM as a refinance vehicle to eliminate debts, pay for healthcare and/or cover daily living expenses, a growing segment of the senior population is using the HECM to purchase a home that better suits their needs.

The advantage of using a HECM for Purchase is that the new home is purchased outright, using funds from the sale of the old home, private savings, gift money and other sources of income, which are then combined with the reverse mortgage proceeds/award. This home buying process leaves you with no monthly mortgage payments for as long as the last home owner lives or lives in the home permanently. This option is available in fixed rate or adjustable rate formats.

While study after study reveals that an overwhelming percentage of seniors want to continue living in their current home for as long as possible, for some people this just isn’t the best, or safest, option. HECM for Purchase offers a solution to downsize into a place that’s more easily navigable, possibly more energy efficient, with lower maintenance costs, or which is closer to friends and family.

Cindy Allen - The Allen Team

Cindy Allen - The Allen Team
NMLS ID#452448

651-245-3940

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