Florida Reverse Mortgage

Reverse Mortgage Lenders Changing Margins at Closing

2009-05-10T13:18:57-05:00

This week we saw an influx in reverse mortgage applications being transferred from other lenders to our company. Apparently many of the large banks offering reverse mortgages would rather change the rules on a Senior just before closing than give up any profit on the loans.

One Senior was surprised with needing thousands of dollars to close because of the elimination of the HECM LIBOR 250 PROGRAM margin that he had originally been quoted. Unwilling to close under these terms he sought out an alternative lender, he came across our website and we were able to match his original principal. As a smaller lender we are willing and able to make the decision at the local level to drop our profit on a loan to help a senior. With big banks this decision is made at a much higher level and they are unwilling to make changes to help one person, on the smaller side mortgage brokers do not have the ability to offer below market margins. As a smaller FHA Direct Endorsement Lender we are able to set our own rates and fees. This allows us to make a decision to lower our profit and offer a below market program when it's the right thing to do for the Senior.

This business philosophy is paying off because we are seeing a large increase in business with all of these files being transferred to us from other lenders.

Another important aspect of this is our loan officers being paid on Salary. In most situation the loan officers income is directly tied to the company profit on each loan in the form of commissions. In our company our corporate loan officers are paid a nice salary so they can offer the best possible loan and service to our customers without worrying about the impact on their pocket.

If these big banks can't figure out a way to put the customer first, particularly on Reverse Mortgage Loans, they are going to continue to lose loans to smaller lenders like us.

FHA Condos

2008-05-05T15:00:00-05:00

Getting a FHA Reverse Mortgage on a condominium requires a little more paperwork, but is a great option for many seniors. FHA has special guidelines for condominiums to help judge the stability of the condominium complex. In a few cases we have actually worked with borrowers and their condominium associations to have the condo rules changed in order to meet FHA Guidelines.

As an FHA Direct Endorsement Lender, we can actually issue "Spot Approval" on condominiums that are not already FHA Approved. This saves a lot of time since we issue these approvals without having to send the condo documents to FHA. There are still guidelines that the condominium has to meet in order for us to issue a spot approval:

90% of the Units must have been Sold
51% of the Units must be Owner Occupied (Not Rentals)
No single entity may own more than 10% of the units
No more than 10% of the units can have FHA Financing (20% if less than 30 units)
Control of the common areas must have been turned over to the association for 1 year
No ongoing or further addition of units, common elements or facilities anticipated
There can be no restriction on conveyance (i.e. first right of refusal at sale)

If you live in a condominium and are considering a reverse mortgage, call one of our reverse mortgage specialist today. They can check to see if your condominium association is approved and walk you through the approval and reverse mortgage process.

Reverse Mortgage: CMT vs HECM

2008-04-17T18:46:04-05:00

Recently the Reverse Mortgage (HECM) market has added a new index to the available options. You now have a choice of the index you will get on your loan.

Lets start by analyzing what the index is. The index determines what the monthly interest rate will be for the life of the loan. Each month the index changes, it is a published financial indicator that is used in the markets. The current choices for HECMs are the 1 Year CMT - the Constant Maturity Treasury Index or the new 1 Month LIBOR - the London Inter Bank Offered Rate.

These rates are published on a regular basis and if they go up, your rate goes up. If they go down, your rate goes down. This is the "horse you are hitching your wagon to." Your interest rate will do whatever these rates do. Unfortunately there is no way to know how an index is going to perform in the future. We can however look at the historical values of these rates.

HECM Tenure Payments

2008-04-06T10:10:00-05:00

The Tenure Payment option of a HECM and some other Reverse Mortgages allows you to receive a monthly benefit payment for as long as you live and continue to reside in the home. These payments are a perfect way to receive a set amount off cash every month to supplement your income.

On a HECM the monthly payments are guaranteed by the Federal Government. If your lenders goes bankrupt or fails to send your payments, the Federal Government will step in and make sure you receive all the money you are due. This is one of the key benefits of the HECM loan. If you take tenure payments on any other reverse mortgage product you are depending solely on that lender. If the lender is unable to unwilling to make you payments, you do not have the protection of the Federal Government. For this reason, if you are seeking a reverse mortgage that is not government insured, I would suggest taking all of your cash up front.

You will receive more money through the tenure payment option, and pay less interest. The interest only accrues on the funds as you receive them. The calculations mandated by HUD for HECM reverse mortgages takes this into account and gives you access to more money.

As an example we had a client recently who was 62 and was eligible for either 106,000 cash up front or $590.72 per month for life. If they lived to be 90, they would receive a total of 198,481.00. You can see the extra cash created over time. The alternate situation to consider is investing the 106,000 - what would the value be in 28 years? This depends on the returns available in the market, these are the choices you must analyze and consider when deciding on a reverse mortgage. With the HECM tenure option the return and the payments is GUARANTEED by the government, you don't run the risk of losing the money through poor or under performing investments.

Reverse Mortgage Terms

2008-04-05T22:23:00-05:00

Reverse Mortgage Terms

Education First Reverse Article Server

2008-04-05T15:29:00-05:00

Welcome to the new Education First Reverse Mortgage article server. In order to increase the amount of education information available we have added this article server. The Reverse Mortgage Article Server can be accessed at www.efreverse.com/articles/.

We are adding more articles the database on a daily basis, so check back offten for the latest information.

Thank you for visiting www.efreverse.com