Reverse Mortgages Explained

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Reverse Mortgages Explained
Bob Bozanic Senior Loan Officer Direct
818-384-8078 Bob.bozanic_at_prospectmtg.com
Prospect Mortgage is located at 15301 Ventura
Blvd., Suite D300, Sherman Oaks, CA 91403.
Prospect Mortgage, LLC is a Delaware limited
liability company licensed by the CA Dept. of
Corps. under CRMLA and operates with the
following licenses AZ Mortgage Banker License
BK0903027, BK0909362, BK0908046, BK0908050,
BK0908056, BK0908057, BK0908058, BK0908731,
BK0903112, BK0903912, BK0906650, BK0906913
To check the license status of your CO mortgage
broker, visit www.dora.state.co.us/real-estate/ind
ex.htm GA Residential Mortgage License 16984
IL Residential Mortgage Licensee 6424 MA
Mortgage Lender/Broker License MC2011 MS
Licensed Mortgage Co. MT Residential Mortgage
Lender Licensee 120 NV Division of Mortgage
Lending Mortgage Banker 1173 and Mortgage Broker
3095 Licensed by the NH Banking Dept. Licensed
Banker-NJ Dept. of Banking and Insurance
9932415 Operates as Metrocities Mortgage, LLC
in NY (Licensed Mortgage BankerNYS Banking
Department) OH Mortgage Broker MB803629 OR
Mortgage Lender Licensee ML-2006 PA Dept. of
Banking license 1740 RI Licensed Lender
20021343LL, Broker 20041643LB licensed by the
VA State Corp. Commission as MC-2195. This is not
an offer for extension of credit or a commitment
to lend. All loans must satisfy company
underwriting guidelines. Information and pricing
are subject to change at any time and without
notice. This is not an offer to enter into a rate
lock agreement under MN law, or any other
applicable law. 0509-51
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Presentation Topics

• What is a reverse mortgage?
• How does it work?
• How can it help me, what are some common uses?
• What are the costs involved?
• How am I protected?
• Common Misconceptions
• What are my next steps?

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What is a Reverse Mortgage?

• Enables homeowners age 62 and older to convert
  their home equity into income without having to
  sell the home or give up title
• No required monthly mortgage payments to make
  while still in the home
• Loan proceeds are tax-free and may be
  tax-deductible upon loan repayment
• Reverse mortgages are commonly used to payoff
  existing mortgages, to eliminate the monthly
  payment obligation
• Consult a Financial Advisor or Tax Advisor for
  advise on your unique situation.

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How Can I Receive My Reverse Mortgage Loan
Proceeds?
Description
Loan Option
Immediate disbursement of some or all loan
proceeds
Lump Sum
Credit line available for future use
Line of Credit
Tenure Monthly Payment
Monthly payments for as long as the homeowner(s)
occupy the property
Term Monthly Payment
Monthly payments for a specified number of months
Payment Combination
Create different loan options to suit different
borrower needs
Not all products and options available in all
states
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How Does a Reverse Mortgage Work?

• Loan proceeds available to the borrower are based
  on two main factors
• Age of homeowner(s)
• Value and location of home
• Loan is repaid at permanent move out, and
  repayment never exceeds appraised value of the
  home
• Amount repaid is principal, accrued interest and
  any financed costs

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Reverse Mortgages are Great Options for

• Seniors who do not have enough income to make
  regular mortgage payments
• Seniors who do not wish to make mortgage
  payments, or would like to eliminate that monthly
  payment obligation
• Seniors who could benefit from a stream of income
  during their retirement years
• Seniors who are finding out that traditional
  retirement income sources (IRAs, pensions,
  401(k)s, Social Security) arent sufficient to
  cover everyday living expenses and healthcare
  needs

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What are the Typical Costs Involved?

• Borrowers are responsible for closing costs
• All closing costs can be funded directly through
  the loan
• Closing costs are similar to those of any
  othermortgage loan
• Typical Loan Closing Costs Include
• Appraisal
• Title search and insurance
• Recording fees and mortgage taxes
• Other typical and customary closing costs

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What are My Responsibilities?

• Keep property taxes current
• Keep Home Owners Insurance current
• Maintain property in reasonable condition

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How Am I Protected?

• Reverse Mortgages are Non-Recourse loans
  (borrower can never owe more than the appraised
  value of the home at time of repayment)
• Advance Loan Disclosures and Loan Illustrations
  are provided at time of application
• Counseling is required for all Reverse Mortgage
  Applicants provided by HUD, AARP and other
  reputable organizations

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Most Common Reverse Mortgage Misconceptions

• I can be thrown out of my house or The Lender
  will take my home
• False, homeowner can stay in home until a loan
  maturing event occurs
• Homeowners retain title to the home throughout
  the loan
• I can owe more than my home is worth
• False, homeowner can never owe more than the
  appraised value of the home at the time the loan
  is paid off.
• My heirs will be against it
• False, experience demonstrates many heirs are
  generally in favor of Reverse Mortgages, and
  there are compelling estate planning values to
  these loans

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Common Questions and Answers
Question Are borrowers limited on how
they can use the money they receive
from a reverse mortgage? Answer No, the money
can be used in any way they like. Common uses
are home modifications, healthcare, paying off
existing mortgages and supplemental income.
Question How much money will be owed when the
loan has to be repaid? Answer The
total amount borrowed, which includes any
accumulated interest, mortgage insurance
premiums, financed origination fees and closing
costs will be owed at time of repayment.
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Common Questions and Answers (cont.)
Question When does the loan have to be
repaid? Answer If the borrower moves out of
the home for more than 12 consecutive months,
sells the home or all borrowers on title passes
away, the loan must be paid off. Question
Is it required that borrower receive counseling
before getting a
reverse mortgage? Answer Yes, counseling is
required to protect borrowers from receiving
incorrect information about reverse mortgages.
Counselors will review loan programs, costs and
alternative solutions with potential borrowers.
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Questions?
For more information please contact me at
Bob Bozanic Senior Loan Officer Direct
818-384-8078 Bob.bozanic_at_prospectmtg.com