Presentation on theme: "PLAN AND PREPARE : FUND LONGEVITY WITH A REVERSE MORTGAGE AND ENHANCE YOUR QUALITY OF LIFE."— Presentation transcript:
PLAN AND PREPARE : FUND LONGEVITY WITH A REVERSE MORTGAGE AND ENHANCE YOUR QUALITY OF LIFE
As a financial planner, you may have many prospective clients that appear to not have any money to invest that are over the age of 62. You may have even considered the prospective client a “dead” lead and put them off to the wayside. THIS IS NOT THE CASE!!!
What if we told you there was a way for these “dead” leads to unlock funds they have access to? What if we told you that you could increase your commissions while helping seniors secure their retirement? What if we told you that you have the “keys” to unlock a segment of our mutual market that has been combed through but never fully utilized?
Do you have clients that have or are looking to pull money out of investments? Instead of losing your commissions by clients depleting their investment accounts, there is a better way of taking care of your clients that may not have even been considered before.
The “key” lies within the government sponsored, FHA insured, Home Equity Conversion Mortgage otherwise known as a “Reverse Mortgage.” The reverse mortgage is a program for seniors 62+ that converts unused equity in their home into tax-free income while eliminating borrower’s monthly mortgage payments. The proceeds seniors receive can be used to solidify their retirement income. THIS IS WHERE YOU COME IN!
Many seniors are not educated on reverse mortgages and the many financial benefits that can be derived with the proceeds borrowers are eligible to receive tax-free. The proceeds can utilized on several different platforms including: Life Insurance policies Investing opportunities Stocks Bonds Mutual Funds Plus many more!
REVERSE MORTGAGE FACTS A financial option for homeowners, 62+ Convert home equity into cash without monthly mortgage payments* Purchase a home without monthly mortgage payments* Flexible Terms No monthly mortgage payments required* Pre-pay with NO penalties Limited income and credit requirements Proceeds are tax-free* The loan matures when the last borrower leaves the home permanently *Property taxes, homeowners insurance and HOA dues must be kept current as applicable ** Consult your tax advisor
LET’S CLEAR UP SOME MISCONCEPTIONS Lender DOES NOT take ownership of the house Lender DOES NOT share in the appreciation Poor credit DOES NOT disqualify a prospective borrower Residence DOES NOT have to be debt-free Social Security & Medicare are NOT at risk Medi-Cal Can be affected Your proceeds can be tailored to meet your qualifications Non-Recourse Loan: One can NEVER owe more than the value of the home at repayment Other assets will NEVER be invaded by the lender Reverse mortgages are NOT just an option of ‘last resort’…They should be considered in your overall financial planning. The largest reverse mortgage in history was approved for $18M on a Bel Air home, valued at $54M.
UNDERSTANDING BORROWER OPTIONS Option 1: Bob and Sally are 75 years old and own their own home ‘free and clear,’ valued at $235,000. Use reverse mortgage options to stay in their home and maintain their current lifestyle Reverse Mortgage proceeds available to them: $646 monthly payments for life, or $66,980 Lump Sum, or $58,943 available at closing and $45,496 available after the first year. The reverse mortgage has a growth rate that increases available funds over time Can never be reduced or eliminated due to market changes
UNDERSTANDING BORROWER OPTIONS Bob and Sally are considering how they will use their reverse mortgage proceeds: Retire other debt? Pay for long term care insurance premiums? Pay for increasing health costs? Set up college funds for their grandchildren? Renovate their home as their generational requirements change?
UNDERSTANDING BORROWER OPTIONS Option 2: Bob and Sally decide to sell the home, downsize to a $100,000 home that fits their current needs Sell their $235,000 home Pay cash for the new $100,000 property leaving $135,000 to invest and live on… -OR- Use a reverse mortgage to finance the purchase of their new home. At 75 years of age… A reverse mortgage can provide $$$ in proceeds to purchase a new home. Bob and Sally ONLY have to come to closing with $55,061. This leaves $179,939 to fund remaining longevity.
HOW MUCH CAN A BORROWER QUALIFY FOR? Available proceeds (Principal Limit) are calculated using the following factors: Appraised value of the home or FHA lending limit, whichever is less. Current interest rates. Age of youngest borrower
WHICH PROGRAM IS RIGHT FOR YOUR CLIENT? FHA/HUD Insured Home Equity Conversion Mortgage (HECM) Fixed Rate Option Adjustable Rate Option, Monthly LIBOR Index FHA National Lending Limit= $625,500 Loan Options and Fees: HECM Standard Fixed FHA Mortgage Insurance Premium + Standard Closing Costs HECM Standard Libor FHA Mortgage Insurance Premium + Standard Closing Costs If you have a client, friend, or loved one that may be thinking about a reverse mortgage, this is the time…
WHICH PROGRAM IS RIGHT FOR YOUR CLIENT? Lump Sum Line of Credit With growth rate, funds increase over time Receive a lump sum at closing as well as an additional lump sum after the first year Draw proceeds as you need them Monthly Income Tenure (monthly check for life of the loan) Term (borrower chooses monthly amount) HECM Standard Fixed FHA Mortgage Insurance Premium + Standard Closing Costs HECM Standard Libor FHA Mortgage Insurance Premium + Standard Closing Costs Any Combination of the 3 above ***These options can be changed at any time
WHAT ARE THE INTEREST RATES? LIBOR Monthly Adjustable Rate: 2.32%, Monthly adjustable (as of 12/19/2014) 2.75% Lender Margin 5.070 Expected rate Fixed Rates: 4.75%; 5.06%; 5.18%; 5.31% (as of 12/19/2014) FHA Mortgage Insurance Premium: 1.25% - 2.50% annual rate depending on product
AVAILABLE CREDIT LINE GROWTH Unused Line of Credit balance increases… Interest rate2.902% FHA MIP1.250% =Growth Rate4.152% (Rate as of 04/23/2014)
KNOW SOMEONE 62 OR OLDER, OWNS A HOME AND… Can’t afford to pay their bills each month Can’t refinance because they are unable to meet income requirements Wants to sell a home and downsize into a smaller home Can’t buy a home or refinance because of credit requirements Is losing their home to foreclosure Doesn’t want to be using their 401k or retirement income to live on just yet Wants a nest egg for security
REVERSE MORTGAGE PROCESS The Reverse Mortgage process takes between 30-45 days for most borrowers.
We will work with your clients to help them get the funds you need to secure their retirement! This niche will allow you to convert more prospects into actual clients while furthering your credibility in the industry as an innovator. Take advantage of this referral networking opportunity with Elite Mortgage to better service your client and increase your income!
CONTACT ME GLENN THOMAS TODAY AT (916)549-3506 TO RECEIVE FURTHER INFORMATION ABOUT HOW THE REVERSE MORTGAGE MAY BENEFIT YOU, A CLIENT, A FRIEND OR LOVED ONE. For business professional use only. Not for consumer distribution. The preceding example and any calculations therein are hypothetical and are for illustrative purposes only. We do not guarantee applicability or accuracy in regard to client’s individual situation or circumstance. Information contained within this strategy is not intended to replace qualified, professional investment and/or tax advice.