GRI ForPurchase_modified 2-17-10

Slide 1: 

HUD’s New Reverse Mortgage for Purchase Program Prepared and Presented by Earl Rose Vice President of Mortgage Lending Blaine, MN 763-450-3445

The Only Recipient in Minnesota : 

The Only Recipient in Minnesota

A Little Bit About Ourselves : 

A Little Bit About Ourselves Dr. John Weicher & Me National Reverse Mortgage Convention Chicago - 2003 60 years ago – Big Lake First FHA / Rural Improvement Loan in U.S. in 1949

Big News in 1949 in Minnesota : 

Big News in 1949 in Minnesota Article talks of stopping the epidemic of farm children burned up by faulty heating systems every winter Farmers Home Administration was the insurer of the first Rural Home Improvement loan Senator Eugene McCarthy with a senate delegation travels to Big Lake, MN, witness the signing of the first loan

If you are 62 years old or older : 

If you are 62 years old or older You may be eligible for a government-insured REVERSE MORTGAGE

FHA/HUD Mortgages : 

FHA/HUD Mortgages (Share this information with someone who may need it) FHA/HUD offers safe, government-insured programs to help homeowners. It provides seniors with an insured program providing safe, easy access to their home equity.

Slide 7: 

Take the First Step Towards a Reverse Mortgage Contact a reverse mortgage counselor; your lender will give you a list of available counselors or counseling agencies Learn more about reverse mortgages and discuss options Receive a certificate of counseling Decide if a Reverse Mortgage is right for you Give your Reverse Mortgage Certificate to your lender Begin your loan processing

Scenario #1 : 

Scenario #1 $300,000 Home Purchase w / Large Downpayment 72-year-old purchaser $200,000 Down $100,000 Mortgage $105,000 Down $211,000 Mortgage $550 Monthly payments $0 Monthly payments $95,000 $0 Cash Left: Cash Left:

Scenario #2 : 

Scenario #2 $300,000 Home Purchase Traditional Mortgage: 20% Down 72-year-old purchaser $ 60,000 Down $240,000 Mortgage $105,000 Down $211,000 Mortgage $1,379 Monthly payments $0 Monthly payments $95,000 $140,000 Cash Left: Cash Left:

Scenario #2 : 

Scenario #2 $300,000 Home Purchase Cash Flow Recovery 72-year-old purchaser $1,379 Monthly payments $0 Monthly payments With $1379 monthly mortgage payments it would take 2 years, 9 months to Recover the $45,000 Difference

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Age of youngest borrower Value of home Current Interest Rate Balance of current mortgage How do you qualify?

FOR PURCHASE Reverse Mortgage : 

FOR PURCHASE Reverse Mortgage Whether it’s to sell current residence and: Move to a new existing home Downsize to a smaller home Build a dream home The new mortgage is based on the purchase price and the age of youngest borrower * The new home must be your primary home ____________ * A downpayment may be needed to establish approximately 40% equity in the home.

HUD’s Reverse Mortgage for Purchase… : 

HUD’s Reverse Mortgage for Purchase… The Senior (Borrower) doesn't have to use all of his or her personal financial resources or assets The Borrower uses the available Reverse Mortgage for Purchase funds (along with down payment, if needed) to complete the purchase

Key Points of a Reverse Mortgage for Purchase : 

Key Points of a Reverse Mortgage for Purchase The Home is purchased and title is transferred to the Borrower The Borrower must occupy the home as the primary residence within 60 days of closing Only the HECM loan may be used to buy the home No other mortgage loan/lien may placed on the property

Key Points of a Reverse Mortgage for Purchase : 

The difference between the purchase price of the home and the Reverse Mortgage proceeds must be paid in cash, from the sale of an existing home, stocks, or investments, etc. Key Points of a Reverse Mortgage for Purchase

Key Points of a Reverse Mortgage for Purchase : 

The Borrower identifies new property and the lender estimates the Reverse Mortgage amount Borrower completes the HUD-required Reverse Mortgage counseling The Borrower: Applies for the Reverse Mortgage for Purchase Negotiates home price If new construction: gets the certificate of occupancy or equivalent Key Points of a Reverse Mortgage for Purchase

Key Points of a Reverse Mortgage for Purchase : 

Borrower Determines funding Personal funds Reverse Mortgage funds Lender Must verify source of personal funds in advance Submits documentation to Underwriting Key Points of a Reverse Mortgage for Purchase

Key Points of a Reverse Mortgage for Purchase : 

18 Origination process is completed: All borrowers must receive Reverse Mortgage counseling Home appraisal Home inspection, optional Final payout of funds is determined Key Points of a Reverse Mortgage for Purchase

Key Points of a Reverse Mortgage for Purchase : 

Closing: Borrower signs documents Borrower receives deed to the property Payout is a lump sum draw that funds the purchase Key Points of a Reverse Mortgage for Purchase

Key Points of a Reverse Mortgage for Purchase : 

Remaining funds: choice of payments Lump sum Line of credit Tenure or term payments Combination of the above Key Points of a Reverse Mortgage for Purchase

Maximum Claim or Mortgage Amount Calculation : 

Maximum Claim or Mortgage Amount Calculation HECM for Purchase transactions: the maximum value (claim) limit is the lesser of: The appraised value or... The sale price in the purchase agreement or... The FHA HUD mortgage limit for a single family residence (currently $625,500.00)

Amount Available : 

Amount Available The amount available (principal limit) is determined by: The age of the youngest person on title Maximum claim amount of the home Interest rate on loan

Purchase Contract Guidelines : 

Purchase Contract Guidelines Borrower must provide: A copy of the fully executed contract No items left blank Signed and dated by all buyers and sellers Name of the property seller on the Contract must match the name of the owner of the property as shown on the Title Commitment (continued)

Purchase Contract Guidelines : 

Purchase Contract Guidelines Borrower must provide: Earnest Money Agreement Proof of payment of earnest money cleared check or bank statement At closing, a verification of Net Funds required (continued)

Purchase Contract Guidelines : 

Purchase Contract Guidelines Underwriting will assess the Borrower's ability to pay taxes, insurance, and homeowners’ association (HOA) dues, if applicable

Funds for the Reverse Mortgage for Purchase : 

Funds for the Reverse Mortgage for Purchase Funds brought to the closing are verified in advance Prepaid items may be financed in the loan balance For example: state and local taxes; prepaid property-related expenses

Funds for the Reverse Mortgage for Purchase : 

Funds for the Reverse Mortgage for Purchase Gifts follow same HUD/FHA standards No bridge loans or gap financing

Funding That is Ineligible : 

Funding That is Ineligible Loan discount points Interest rate buy‑downs Closing cost assistance Builder incentives Seller contributions or seller financing Credit card advances Secured or non‑secured loans from other assets (car, investment property, second home)

At Closing : 

At Closing Borrower provides down payment Difference between the principal limit and sales price for the property Borrower pays any loan related fees that are not financed or offset by allowable funding sources (continued)

At Closing : 

At Closing Title insurance evidence of the "transfer of the deed to the Borrower" is required Deed to the new property is executed After Closing: Borrower must occupy new property as the primary residence within 60 days from closing date

New Construction : 

New Construction Can a lender take application on a property that is under construc-tion and not habitable? No. The lender may only take application AFTER the Certificate of Occupancy or its equivalent has been issued. FAQ

Verification of Funding Source : 

Verification of Funding Source If the source of funds comes from the sale of the home-owner's principal residence or other owned property, and the sale is occurring the same day as the closing on the HECM Reverse Mortgage, can a copy of the executed HUD-1 and cashier's or certified check evidencing the sale be used to verify the funding source? Yes. In addition to the HUD-1, a copy of the sales contract executed by all parties and a copy of the cashier's or certified check bearing the name of the seller can be used to verify the funding source. FAQ

Benefits of a Reverse Mortgage : 

Biggest advantage: NO Mortgage Payments − EVER! Benefits of a Reverse Mortgage

Will Not Adversely Affect Your Estate Planning : 

Will Not Adversely Affect Your Estate Planning

Must have HUD counseling certificate before file can be completed : 

Must have HUD counseling certificate before file can be completed No Income or Credit Requirements Application may be taken prior to counseling, but not prior to the appraisal, credit, or titlework

What are Your Responsibilities Once You Get Your Reverse Mortgage? : 

What are Your Responsibilities Once You Get Your Reverse Mortgage? Real estate taxes Hazard insurance Maintenance of home

No QualifyingObstacles to Overcome! : 

No QualifyingObstacles to Overcome!

Any Questions? : 

Any Questions? Call for more information. 763-450-3445

End of PresentationThe presentationwill repeat. : 

End of PresentationThe presentationwill repeat.