Reverse Mortgages
Credit Union Mortgage Association
9693-A Main Street
Fairfax, VA 22031
(800) 231-8855
www.CUmortgage.net
A New Kind of Mortgage
Loan….. in Reverse:
“Reverse Mortgages”
What is a Reverse Mortgage?
A Reverse Mortgage is a unique loan that
allows homeowners age 62 years and older
to convert part of the equity in their home
into monthly income or cash without
having to sell the home, give up title, or
take on additional monthly mortgage
payments.
Reverse Mortgages



No monthly mortgage payments
No loan repayment until the member
moves out permanently (sells home,
passes away, etc.)
Member will never have to leave their
home
Qualifications For Reverse
Mortgages





Applicant members must be at least 62 years of
age
Must be a homeowner (single family residence,
condo, townhouse, manufactured housing built
after June 1976)
Home does NOT need to be owned “Free&Clear”*
No income or medical requirements to qualify
No credit or credit score requirements
*Basic qualifications typically require an equity position between 30-35%
Reverse Mortgage loan proceeds are Tax-Free* and
can be paid to the member in several ways:
 Single
 Line
Lump-Sum advance at funding
of Credit allowing members to draw on
available funds whenever necessary
 Annuity
- Fixed regular monthly income payments
to the member
 OR a combination of ALL the options above
(Example: ½ lump sum; ¼ line of credit; ¼
monthly income/annuity payments)
* Certain tax implications may apply for lump-sum payments. Interest may be tax deductible upon loan repayment, please consult your tax advisor.
Uses for Reverse Mortgage
Proceeds









Repay existing mortgages
Home repair / home improvement
Pay property taxes and homeowners insurance
Supplemental retirement income / daily expenses
Hospital / health care costs
Preserve home / inheritance for heirs (prevent
foreclosure)
Travel / something special (car, RV, ect..)
Gifts to family members
Reduce burden on children
How Much Will a Member Qualify For?
The amount a member qualifies for depends on the
following:
 Age of the homeowner (in case of couples the principle
limit is based on the younger of the two and both must
be 62 years of age or older to qualify)
 Appraised value of your primary residence ~ Single
Family Residence, Condominium or Townhouse)
 Geographic location of home due to lending limit
restrictions
 Current interest rates
 www.CUmortgage.net
When Do I Pay Back the Reverse
Mortgage?




The Reverse Mortgage is repaid when the
member's cease to occupy their home as a primary
residence (sell, move out, pass away, etc.)
Repayment amount includes principal, accrued
interest, monthly MI premiums and servicing fees
No monthly payments are due on a Reverse
Mortgage while it is outstanding
Repayment will NEVER exceed the value of the
home
Closing Costs






Appraisal
UFMIP - Up Front Mortgage Insurance
Premium (if applicable)
Origination Fee
Title insurance
Recording fees
Other typical and customary closing fees
*All closing costs are typically included in the loan which means no out of pocket expense
Myth vs. Fact:
Common Misconceptions Regarding
Reverse Mortgage Loans
MYTH: The lender takes ownership of the house
FACT: Homeowner retains ownership. The loan
is secured by a deed of trust or a mortgage just
like a conventional mortgage, however the
member’s DO NOT MAKE PAYMENTS as long
as they live in the property.
Myth vs. Fact (cont’d):
Common Misconceptions Regarding
Reverse Mortgage Loans
MYTH: I can be thrown out of my house
FACT: Homeowners can stay in the home until
they move out of the home permanently (sale,
death, etc.)
Please note that it is your responsibility to keep the property taxes and homowners insurance
current on the property
Myth vs. Fact (cont’d):
Common Misconceptions Regarding
Reverse Mortgage Loans
MYTH: My heirs are or will be against it
FACT: Experience demonstrates heirs, once
educated on the loan product, are in favor of
Reverse Mortgages as it allows the family
member to live in their property without being a
financial burden on the heirs
Myth vs. Fact (cont’d):
Common Misconceptions Regarding
Reverse Mortgage Loans
MYTH: I can owe more than my house is worth
FACT: The loan balance will NEVER exceed the value
of the home. Reverse Mortgages are classified as NonRecourse which means the loan payoff can never exceed
the value of the home.
Myth vs. Fact (cont’d):
Common Misconceptions Regarding
Reverse Mortgage Loans
MYTH: The children will lose their inheritance:
FACT: Historically, most houses continue to
appreciate over time. A high percentage of
houses still have enough equity to pass down as
inheritance – allowing them to sell or refinance
the home
Myth vs. Fact (cont’d):
Common Misconceptions Regarding
Reverse Mortgage Loans
MYTH: The loan balance will exceed the property
value:
FACT: If for some reason the loan balance
exceeds the value of the property the additional
amount is “forgiven” and NOT responsible by the
heirs
Myth vs. Fact (cont’d):
Common Misconceptions Regarding
Reverse Mortgage Loans
MYTH: Reverse Mortgage loan proceeds/income
will affect my Medicare/social security income:
FACT: Loan proceeds DO NOT affect Social
Security or Medicare benefits. It is your “taxfree” money to spend as you please.
Medicaid: Please consult your tax advisor should you have any questions regarding Medicaid benefits.
Myth vs. Fact (cont’d):
Common Misconceptions Regarding
Reverse Mortgage Loans
MYTH: The costs of a Reverse Mortgage are too
high:
FACT: Compared to other mortgage loans, in many
instances the benefits will outweigh the costs with the
members’ ability to finance all closing costs (no out-ofpocket expense). The major benefit of a Reverse
Mortgage is NOT having a monthly mortgage payment,
as long as the property is occupied as a primary residence.
In the long term, keeping the Reverse Mortgage for the
member’s life, the costs are comparable to regular
mortgage loans.
The Potential & Growing Market






21+ million senior homeowners (62+ years old)
60% of the housing market is 65 - 70 years old
85% of these seniors want to remain in their
homes (AARP study)
$3 trillion in home equity available and growing
Loan volume has increased by 70% per year for
the past two years
Studies show 93% satisfaction rate with Reverse
Mortgages
Member’s Responsibility

Keep real estate taxes current
Maintain homeowners insurance
 Maintain property in good condition


Use home as primary residence
Products Available
• FHA/HUD Insured “HECM” (Home Equity
Conversion Mortgage).
• Home value limit = $362,790
• Fannie Mae HomeKeeper.
• Home value limit = $417,000
• Cash Account Advantage.
• Virtually NO home value limit
• Equity choice feature available for credit line
or cash-out option.
* Not all products available in all states
** 2006 loan limits shown
Reverse Mortgage Program
Contact:
For more information please contact our
Reverse Mortgage Specialist:
Rob Treadway
Toll Free: 800-231-8855 Ext. 128
Local: 703-425-1204 Ext. 128
RTreadway@CUmortgage.net
www.CUmortgage.net