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Reverse Mortgage Update
Welcome to the third edition of the Reverse Mortgage Update. Stay current with the latest information in the industry as well as learning how and why consumers are using the Reverse Mortgage program.
Have you considered using a reverse mortgage to help preserve a retirement portfolio?
Let's face it, everyone's retirement accounts have taken a hit and if your client continues to withdraw from it at the same pace they will run out of funds sooner than expected. The reality is the smaller the retirement account the less growth potential there is
What if you had another source of funds and your client could eliminate or reduce the draws on their retirement account? A reverse mortgage has the potential to address this issue. Think about it, a home will appreciate or depreciate based on its value not the equity in the home. A retirement account is only going to grow based on what's in the account.
Home= $100,000 Retirement Acct= $100,000
Withdrawal $ 50,000 Withdrawal $ 50,000
Appreciation based on growth based on
$100,000 $ 50,000
I think this is an option worth looking into. There are advantages to setting up a reverse mortgage now. With rates low your client will qualify for more, creating a larger pot of money. Keep in mind that once the account is set up the unused credit line continues to grow increasing your clients borrowing power. Plus, you will be adding another tool to your client's portfolio providing them another source of money, with the flexibility to start and stop those withdrawals at anytime. Although this may not make sense for every client, it is definitely worth considering.
Interest Rates and Reverse Mortgages
Summary of changes
It was less than a year ago that Reverse Mortgages were being offered with a margin of 1% - 1.5%. Today you would be hard pressed to find a margin less than 2.75% over the Constant Maturity T-Bill.
With rates still hovering just below 3.5% a consumer will qualify for a larger initial pot of money as well as lock in the ceiling rate at a lower rate.
Another increase in the lending limit by FHA.
What does this mean?
We saw lending limits in Ohio increase to $417,000. Last week FHA increased them again to $625,000. This means that homes valued up to $625,000 will have loan amounts calculated on the full value. Clients can access more money on higher valued homes.
Benefits of a Reverse Mortgage
No monthly mortgage payments Tax free income
Credit scores don't matter No pre-pay penalties
Minimal credit requirements Third-party counseling
Homeowner remains in title Government insured Variety of draw options Non-recourse loan
Won't affect social security benefits
Reverse Mortgage Uses
Supplemental Income Home Repairs and Improvement
Long Term Care Expenses Divorce buyouts
Medicaid Planning Medical and Home Care expenses
Second Home Relocation
Did you know Brooker Financial also has a Commercial Leasing Division, in addition to our traditional, FHA, VA and commercial mortgages? Call for more information - (440) 334-5269
Brooker Financial Corp.