Guide to Reverse Mortgages

The opposite of a traditional mortgage...

a reverse mortgage pays you money

Buying a home means borrowing a large sum from a bank and paying down that debt to increase equity and wealth in the home. With a reverse mortgage, the opposite is true. Instead of making payments, a reverse mortgage borrower uses equity to gain income. Throughout the life of the loan, the balance gets larger while the equity gets smaller.

For many, retirement is a mixed blessing. On one hand it is a time to enjoy family and friends, explore special interests, cultivate new skills and enjoy living to the fullest. But retirement years can present special challenges.

All too often people find themselves in need of extra income just to keep up. We focus on helping seniors live in their home comfortably and securely by turning the equity in their home into extra cash or monthly income. We understand that each individual's needs are unique. That's why we offer reverse mortgage options to suit your individual needs.

Deciding if a reverse mortgage is right for you is an important decision.  We encourage you to take your time, understand your options, discuss them with those you trust and feel free to contact us for assistance at any time.  We are confident we can help guide you to the solution that works best for you.  Ultimately the decision will always be yours.  We respect that and will work closely with you to help you make the most of your resources.  For many, a reverse mortgage can be a solid financial tool that may improve quality of life.

If you are 62 years of age or older and have equity in your home, a reverse mortgage can turn that equity into cash, a line of credit, monthly income or a combination of the three.  Unlike a traditional mortgage, there are no required monthly mortgage payments and the proceeds are tax-free.  There is no income qualification.  Best of all, you retain ownership of your home and can live there for as long as you choose.

Is a reverse mortgage right for you?

Your home is one of the biggest financial commitments you make, and it represents one of our biggest and often most overlooked sources of extra income.  The ability to remain in your home while taking care of yourself financially is important.  A reverse mortgage gives you that opportunity, if you own your home outright or have only a small mortgage.  If you could benefit from extra cash to supplement your existing income, reduce credit card debt, cover medical expenses, help a loved one or just enjoy life a bit more, a reverse mortgage may be right for you.

What people are saying about their reverse mortgages

"No longer do I have to tell myself I can't have something... once again, I am able to relax and enjoy life I've created with my friends.  No problem meeting the expenses for my medications, which is a significant cost to cover my current medical conditions.  I am happy, enjoying living, playing bridge and keeping my mind active"

"It was the right decision for me, and my family thinks so too.  The payments always come on time, and the people are always helpful.  I wish I could say more good things about my reverse mortgage, but you'd think I worked for them if I did"

"I paid off the existing mortgages and some credit cards.  And, I now have a guaranteed income for the rest of my lifetime.  The reverse mortgage program allows me to save something for Linda (his daughter) and enjoy my retirement, too."

"Everything went perfectly; no problems at all.  It took about 30 days to close the loan and they did everything they said they would!  I took some of the money right away and did some fixing up on the house-- new paint, a new roof, a termite exam and repairs.  The best part of the whole thing.  As long as I live, the annuity will be in force."

Options to meet your wants and needs

There are several different reverse mortgage payment options.  We can help you assess your individual situation and recommend a payment method that best meets your needs.

Reverse Mortgage Loan Payment Options

• Line of Credit- access the equity in your home at your convenience
• Monthly payment- get a monthly payment for a set term or for life
• Lump Sum- get cash at time of loan closing to address any current obligations
• Combination of the above- a customized plan to meet your unique needs

Uses of a Reverse Mortgage

Borrowers have many reasons for choosing a reverse mortgage.  Some are needs-driven, others enhance quality-of-life choices.  AARP, in conjunction with HUD/FHA, completed a survey of homeowners who elected a reverse mortgage, the results of which are provided in the following chart:

Hospital/ healthcare costs    --------------------------- 67%

Repay existing mortgages    -------------------  55%

Reduce burden on children   ---------------  50%

Home repair/ improvement    ---------------  50%

Pay property taxes             -----------  38%

Daily expenses                  --------  29%

Travel/ something special    -----  14%

Gifts                                ---  3%

The process

We make it easy as possible for you to obtain the reverse mortgage that's right for you.  We're with you every step of the way.  Because we know these decisions can sometimes be daunting, we encourage you to seek the advice and cousel of those you trust most--your family, friends, attorney, and accountant.

1.  Getting Started

If you want to learn how a reverse mortgage will work for you, a loan consultant will explain the benefits, features, income, and costs.

2.  Qualifications

Benefits are generated based on the following:

• Appraised value of home or maximum lending limit
• Borrower's age  (62 years)
• Available home equity

3.  Taking Action

When you are ready to move forward, we will assist you in completing an application and schedule a counseling session with an approved counselor.  All loan fees and closing costs (appraisal will possibly need to be paid up front) can be paid out of the benefits, requiring little to no money out of pocket.

4.  Gaining Independence and Remaining in Control

A lien is recorded against the home, but the borrower will retain full title to the property and remain in control of the home.  The borrower continues to have the responsibility for maintaining the home and paying property taxes and insurance premiums.

Commonly asked questions

Q.  How much can I receive?

A.  The amount of money you receive depends upon several factors:  your age, the value of your home, and the specific plan you choose.  Your Loan Advisor can help you determine which plan best meets your needs.  While each individual's situation is different, as a rule of thumb the older you are and the higher your home's appraised value, the more money you can recieve.

Q.  What are the costs?

A.  Costs vary from one program to another.  That's why we offer a variety of programs to meet a variety of needs.  Most reverse mortgages, however, have costs similar to traditional mortgages such as interest charges, origination fees, closing costs, inspections and insurance.

Q.  Do I retain ownership of my house?

A.  Yes.  A reverse mortgage is a lien just like a traditional mortgage.  Repayment is required when the last surviving borrower sells the house, moves or passes away.

Q.  What can I expect from the process?

A.  We believe the first step is the most important.  That's when you and your Loan Advisor review your goals and objectives and come to a common point of view on which plan best meets your needs.

Once you are comfortable that you are making a good decision, the process moves forward efficiently.

Q.  Who should I look to for advice?

A.  Decide who you trust, then discuss your intentions with them.  It may be your attorney, a financial advisor, AARP, a family member or close friend.  We want you to feel confident in your decision.

Q.  Are there any restrictions on what I can do with my money?

A.  No, you can use the proceeds for whatever you want.  After all, it is your money.

Fast Facts:

• All borrowers must be 62 years or older
• No required mortgage payments while loan is in effect
• No repayment is made until the home is sold or the owner permanently moves out or passes away
• You will never owe more than the appraised value of your home
• No income or employment qualification
• Interest is paid at the time the loan is repaid
• When the loan is due, your heirs have choices---they can repay the loan and keep the house, or sell the home and repay the loan
• Social Security benefits and Medicare are generally not affected by a reverse mortgage---consult your tax advisor
• You own your home---the lender does not hold the title
• Closing costs and fees incurred can be financed as part of the loan

Getting Started

Please call for an initial consultation and to request our two very short questionaires so we can help you determine your eligibility and decide which reverse mortgage program is right for you.  Please contact:

Paul Wakefield/ Senior Loan Officer

Office Direct Line:  480-281-8310    Cell Phone:  602-697-7147

email:  paul@approveamortgage.com      efax:  602-445-9255

Paul Wakefield
Senior Loan Officer
Security Mortgage Corporation
Phone: 602-697-7147