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Reverse Mortgage



Reverse Mortgage Overview

This special type of home loan lets homeowners convert a portion of his or her home equity into cash providing for a secure financial future. Without selling the home, giving up title, or taking on a new monthly payment senior homeowners have the benefit of maintaining a lifestyle they have earned. The money from the reverse mortgage provides seniors with the financial security they need to fully enjoy their retirement years.

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What is a Reverse Mortgage?

Unlike a traditional mortgage that you pay back each month, a reverse mortgage makes payments to you. You can get these payments in a lump sum to cover an unexpected bill. You can get them as a regular supplement to your monthly income. Or, you can get them at intervals and amounts that are best for you.

We offer reverse mortgage loans that require no repayment as long as your home is your principal residence and you fulfill the borrower's obligations, such as continuing to maintain the property and paying your property taxes and hazard insurance. You pay the money back plus interest and other charges when you sell or permanently move out of your home.

If you pass away, the loan is due, but the amount due will always be the lesser of your loan balance or the market value of your home. Even if the amount you borrowed eventually exceeds the value of your home, you or your heirs will never owe more than the value of your home. All proceeds in excess of what you owe belong to your estate, which means the remaining equity in your home can be passed on to your heirs.

Unlike the loan balance of a conventional mortgage, which becomes smaller with each monthly payment, the loan balance of a reverse mortgage grows larger over time.

As you receive your payments, the amount of cash you have left after selling and paying off the loan -- your equity -- generally grows smaller. But with a reverse mortgage you can never owe more than your home's value at the time the loan is repaid.

If you own your home free and clear or if you have very little mortgage principal outstanding, a reverse mortgage may be a good option for you.

Reverse mortgages are tax-free and can be paid in several different ways:

  • A single lump sum of cash
  • Regular monthly payments as long as at least one borrower lives and occupies your home
  • Regular monthly payments for a fixed period of time
  • A line of credit to paid at your discretion

Borrower requirements:

  • 62 years of age or older
  • Own a property
  • Occupy the property as primary residence



What Sun West Offers

At Sun West, we believe it's about a better quality of life and a high standard of living for our seniors.

Our reverse products include the following:

Home Equity Conversion Mortgage: One of the most popular reverse mortgages and highly regulated as part of the U.S. Department of Housing and Urban Development; the Home Equity Conversion Mortgage (HECM) is a federally-insured private loan providing for greater financial security and a sound plan for seniors. HECM is available to those with single family homes, 1-4 unit homes as long as the borrower occupies one of the units, manufactured homes built after 1976, condominiums, PUD's, and townhomes.

Advantages / Benefits:

  • No income restriction: HECM does not care if you have income or not. It cares about your age and the value of your property.
  • Free you from existing loans: Your existing loans will, actually, must, be paid off by proceeds from the HECM loan.
  • The loan is not due as long as you live in the property: there will be no mortgage payments as long as you are current with your property taxes, have an active homeowner's insurance policy, maintain the property according to the FHA's minimum standards and pay other related charges: H.O.A. dues, water/sewage, etc.
  • A line of credit with growth: You may also choose to have a line of credit that grows every month.
  • Use the proceeds for any purpose: The loan proceeds can be used to pay of credit card bills, medical insurance, or anything you can think of.
  • No prepayment penalty: You may terminate the loan anytime you like by paying off the loan balance without any penalty.
  • Limit on the amount you owe: You will never owe the lender more than the appraised value of your property since the program is FHA-insured.
  • Closing costs may be financed: Almost all of the closing costs can be financed as part of the loan, which means no out-of-pocket expense for you.
  • Social Security & Medicare unaffected: The loan will not affect your existing Social Security and Medicare benefits.




Frequently Asked Questions

Questions:

Home Equity Conversion Mortgage (HECM) is one type of reverse mortgage regulated by HUD. It allows a homeowner to convert a portion of the equity in his/her home into cash. Unlike a traditional home equity loan, the borrower is not required to make repayment as long as he/she occupies his/her home as the principal residence.

There are many advantages of HECM reverse mortgage and we will name a few in the following:

  • No credit qualification: No matter what your credit score is, it does not affect your eligibility for a HECM loan.
  • No income restriction: HECM does not have any minimum income requirement.
  • Free you from existing loans: It pays off your existing loans by using the proceeds from the HECM loan.
  • No more monthly payments: You do not have to make any monthly payment to repay the loan as long as you live at your home.
  • Monthly cash flow: You can receive a guaranteed tax-free monthly cash flow for your entire lifetime.
  • Line of credit: You may also have a credit line established and request money at any time for any purpose.
  • Limit on the amount you owe: No matter how much cash you have received during the course of the loan, you will never owe the lender more than the value of your home.
  • Use the money any way you wish.

All the borrowers on the title must be at least 62 year of age.

HUD is monitoring your interest carefully. For that reason, HUD requires all HECM borrowers receive counseling from a HUD-approved counseling agency.

Yes, as long as the appraisal shows that your home meets HUD's minimum property standard.

Your home can be a single-family residence, a one-to-four unit building with one unit occupied by the borrower, a manufactured home (must have permanent foundation and must be installed), a unit in an FHA-approved condominium, or a unit in a PUD project.

Yes. However, if you need to be hospitalized or moved into a health facility, you may be absent from your home as long as you provide the appropriate notification as required by HUD and FNMA.

No, you will NEVER have to make any monthly payment on your home anymore since Sun West will pay off your existing home loan out of the new HECM loan proceeds.

No, a home that has an existing lien will qualify for a HECM loan as long as the proceeds of the loan are large enough to pay off existing mortgage(s) on your home.

With a traditional home equity loan, you must qualify for the loan and you are required to make a monthly mortgage payment. With HECM, there is no income or credit qualification required and you do not have to make any mortgage payments. This loan is primarily based on your age and the value of your home.

Lender calculates it based on your age, the interest rate, the value of your home, the county your home is located, the total closing costs, the amount of lien against your home and some other factors.

Title of your home always remains in your name, NOT in the name of the lender. Lender has no interest in your home except for the amount you owe the lender.

Your spouse, or if not available, your appointed guardian will continue with the management of the loan.

You practically have the same fees as in any other loan such as origination, appraisal, title, escrow, and the upfront mortgage insurance premium to HUD. All fees are regulated by HUD.

Yes, the value of your home is one of the most critical parameters in determining how much borrowing power you have.

Yes. However, most of these fees can be financed into the loan, which means that you do not have to come up with cash out of your pocket.

Interest may accrue at a fixed or adjustable rate, as negotiated between the borrower and the lender. For adjustable rate mortgages, the mortgage interest rate is set at the U.S. Treasury Securities rate adjusted to a constant maturity of one year, plus a margin which is the same as the margin used to determine the expected average mortgage interest rate.

You do. However, you may authorize us to do so if there are enough funds in the line of credit.

No, it is tax-free. For further information, please contact your tax attorney.

No, it does not affect Social Security and Medicare. For more information, please contact these agencies for your specific circumstances.

There are five options you may choose:

  • Tenure - Equal monthly payments as long as at least one borrower continues to occupy your home as the principal residence.
  • Term - Equal monthly payments for a fixed period of months selected by you.
  • Line of Credit - Unscheduled payment at times and amounts chosen by you until the line of credit is exhausted.
  • Modified Tenure - Combination of a line of credit and monthly payments as long as at least one borrower remains in your home.
  • Modified Term - Combination of a line of credit and monthly payments for a fixed period of months selected by you.

Definitely! You will need to notify us as required by HUD/FNMA. Lender will pay the insurance premium directly out of the funds in the credit line.

If you have money available in your credit line, you can request it any time for medical or personal need. You can also cut back or increase the monthly payment amount. There will be a minimal handling charge as regulated by HUD.

No. However, you are responsible for paying the real estate tax, hazard insurance and flood insurance if applicable. You also need to maintain the condition of your home.

No. You may make a full or partial repayment at anytime without any penalty.

No matter how large the loan balance becomes, you have the right to continue to live in the house. Lender cannot take over your home as long as it is your principal residence. Besides, you will NEVER owe the lender more than the value of your home. HUD will pay the shortage for you, if there is any.

No. After you pass away, your heirs may pay the loan balance in full by cash or by refinancing the debt and they can keep your home.

The HECM loan becomes due and payable as soon as your home is no longer your principal residence.

Yes. Two of the other situations in which the HECM loan may become due and payable are:

  • You fail to pay real estate tax or hazard insurance.
  • You fail to maintain your home in acceptable condition.

Your heirs should pay the debt in full or liquidate your home within 30 days after the Repayment Notice is issued. Otherwise, the servicer will initiate foreclosure proceedings within 6 months of the Repayment Notice.

The lender is paid at the time when the loan becomes due and payable, for example, when you sell your home. The lender will receive a payment from your heirs or sale proceeds of your home.

The total loan balance will include all the payments to you, the accrued interest, accrued mortgage insurance premiums, servicing fee, and other costs such as closing costs or repair fee financed as part of the loan balance. Note that the repayment amount will never exceed the appraised value of your home when your loan becomes due.




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