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Home Jeannette Grismer - Reverse Mortgage Expert~Temecula Murrieta Menifee Hemet

Jeannette Grismer - Reverse Mortgage Expert~Temecula Murrieta Menifee Hemet

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Down Payment Requirements on a HECM for Purchase (FHA Reverse Mortgage)

03-20-11
Jeannette Grismer - Reverse Mortgage Expert~Temecula Murrieta Menifee Hemet

I get this question in various forms from a lot of customers and professionals.

Hemet Home
Homebuyers will wonder, “What kind of down payment do I need?”



The amount of money required as the down payment on a reverse mortgage is based upon three factors.
  1. The appraised value, sales price or FHA lending limit (Whichever is less)
  2. The current EXPECTED interest rate.
  3. The age of the youngest buyer.
Once all these variables are known, your reverse mortgage consultant will enter them into the HECM loan calculator which will use current HUD Factors to determine the loan amount. The difference between that loan amount and the sales price is the “down payment”.

Don’t forget as a buyer you are responsible for also bringing in funds to cover the buyers closing costs, including but not limited to settlement fees, title insurance premiums, loan origination fees, Mortgage Insurance Premium, recording fees, homeowners insurance premium, pro-rated taxes & homeowners dues and transfer fees (if any) WHEW!

Purchasing your new retirement home, or any home for that matter is a complex transaction. . Be sure to utilize the services of an SRES certified Realtor and a Reverse Mortgage Consultant experienced in HECM for purchase transactions in order to avoid unnecessary stress.

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Temecula Reverse Mortgage Question - How long does a reverse mortgage last

02-14-11
Jeannette Grismer - Reverse Mortgage Expert~Temecula Murrieta Menifee Hemet

Temecula Reverse Mortgage Question - How long does a reverse mortgage last? Desert Tortoise

There is a due date on HECM reverse mortgages and it is always set at 150 years from the date of birth of the youngest borrower. However in real world use, we find that the reverse mortgage becomes “Due and Payable” upon certain events. Those events are:

Failure to maintain the home in good condition.
Failure to pay property taxes or insurance on the home.
Failure to live in the home as your primary residence.

As long as you continue to live in the home, maintain the home and keep the taxes and insurance current, the reverse mortgage will stay in place no matter your age - and borrowers who chose to receive their loan proceeds as tenure payments can rely upon those payments to continue month after month until one of the “due events”.


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Hemet Reverse Mortgage Question - How does a reverse mortgage work?

02-02-11
Jeannette Grismer - Reverse Mortgage Expert~Temecula Murrieta Menifee Hemet

How does a reverse mortgage work?

If you are a homeowner at least 62 years of age or older and have sufficient equity in your principal residence, you are eligible to participate in FHA's reverse mortgage program. The program allows you to borrow against your home’s equity. You can choose to receive your loan proceeds in these different ways
  • Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
  • Term - equal monthly payments for a fixed period of months selected.
  • Line of Credit - unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.
  • Modified Tenure - combination of line of credit plus scheduled monthly payments for as long as you remain in the home.
  • Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
You can change your payment options at any time for a fee of $20.

Unlike traditional home equity loans, a reverse mortgage does not require repayment as long as the home is your principal residence, property taxes & insurance are paid and the home is well maintained. Lenders recover their principal, plus interest, when the home is sold. The remaining value of the home goes to you or your heirs.

If the sales proceeds are insufficient to pay the amount owed, FHA will pay the lender the amount of the shortfall. FHA collects an insurance premium (called MIP or Mortgage Insurance Premium) from all borrowers to provide this coverage.

WalnutIn a nutshell - instead of paying monthly house payments out of your pocket, you let your home pay you. A reverse is not for everyone, but if you are looking to improve your monthly cash flow and are planning to remain in your home it may be a suitable financial tool.

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Hemet Reverse Mortgage Question - Do I Qualify for a Reverse Mortgage?

01-26-11
Jeannette Grismer - Reverse Mortgage Expert~Temecula Murrieta Menifee Hemet

Hemet Reverse Mortgage Question - Do We Qualify for a Reverse Mortgage?Cute Older Couple

If you are a homeowner and all owners are over the age of 62, you just might. Some things to know in order to determine whether or not you will qualify. First - do you have enough equity? The amount of money you can borrower on a reverse depends upon 3 things.
  • Age of Youngest Borrower.
  • Expected Rate
  • Lesser of the Home Value or FHA Lending Limit.
It is not the normal 80% of home value, more like 50 to 70 percent. Once you know if you have age and equity on your side, then you need to look to the home itself.
  • Single Family homes in good condition.
  • Some Manufactured Homes on a permanent foundation and attached to real property newer than June 1, 1976.
  • Some FHA Approved Condos.
Next, take a look at how you hold title. Are you in a trust? Most, but not all trusts can qualify for a reverse mortgage, however the lender and title company will want to review it before issuing your loan. You may need an amendment?

What about your credit? Though income and credit score is not an issue, if you have a foreclosure or another FHA loan you will have some issues.

If you are still wondering, I’d be happy to discuss in more detail. You can also talk with a HUD Approved HECM Counselor. Your questions and comments are encouraged! If you’d like to ask me a question you can enter into “Comments” or email me at the link to the right.

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Writing The Offer on HECM For Purchase

01-20-11
Jeannette Grismer - Reverse Mortgage Expert~Temecula Murrieta Menifee Hemet

Home and FlagUsing a reverse mortgage to buy a home is still a relatively new thing for Realtors and Buyers and there are some important things you can do upfront to help make things go smoother and easier.

Contact your buyers' reverse mortgage consultant to discuss how to write up the offer. Here are some things to talk about.

FHA LogoSince a reverse is an FHA transaction, structure your offer that way using the pre-printed FHA checkboxes, clauses and Addendum. You will need to have all parties (buyer, seller and agent) sign the FHA Amendatory Clause.

Be sure that they have already completed their HUD HECM Counselingand submitted a complete loan application to the lender. Unlike the forward world, reverse mortgage loan officers cannot pull a borrowers credit report with just a faxed signed request. We have to have a signed "HECM Counseling Certificate" and completed a loan application. It's okay for the certificate to designate the property as "TBD or To be determined" as that can be updated. The credit report is important even though the credit score is not - some things can disqualify a buyer. For instance, foreclosure within the last 3 years, tax defaults, judgment, or a CAIVRS "hit".

On a Reverse for Purchase, the buyer is NOT allowed to contribute towards the cost of repairs in any manner, including physically doing the work themselves and the seller is NOT allowed to pay any of the buyers closing costs. You will write the purchase contract with local customary splits for title, escrow, inspections and recording costs and the seller paying for all necessary repairs. Adjust the purchase price accordingly.

I would recommend a 30 to 45 day escrow and also that when you select your title and escrow provider that you utilized a company with reverse experience.

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