Silverboat - Reverse Mortgage Loans

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US Department of Housing and Urban Development.

A division of The Department of Housing and Urban Development (HUD).

A government sponsored organization, formally known as the Federal National Mortgage Association (FNMA) that buys and sells mortgage loans.

Large banks or mortgage companies that have created their own proprietary Reverse Mortgage loan products.

The amount of funds remaining in a line of credit.

Available on many Reverse Mortgage loans is an "Annualized Growth Rate" feature. This rate approximates the interest rate charged on a Reverse Mortgage loan and it is applied to the unused portion of a borrower's line of credit. It's similar to interest paid on a deposit account and increases the available cash of the credit line over time.

EXAMPLE: A borrower obtains a $200,000 dollar Reverse Mortgage in the form of a line of credit. $20,000 is used at closing to pay closing costs and home repairs, leaving $180,000 dollar balance. Assuming no additional funds are withdrawn, at an annualized growth rate of 7.00%, the line of credit balance grows to $192,600 dollars from $180,000 in one year â€“ a $12,600 increase. The annualized growth rate is in effect for as long as there is an unused credit line amount.

Required government (HUD) mortgage insurance to protect lenders in case of loan defaults. The upfront cost is two percent (2%) of the loan amount, deducted from loan proceeds, and Â½ of one percent added to the interest rate.

A monetary penalty added to a loan if it is paid off prior to a specific time frame (i.e. within five years). Prepayment penalties may not be charged in all states. Ask your Silverboat advisor for details in your state.

A loan is secured by property only. The borrower does not personally guarantee the repayment of the loan, and other borrower assets cannot be attached for loan repayment.

An Independent ("third party") HUD approved counselor is required to review Reverse Mortgage options with a prospective Reverse Mortgage borrower.

As you compare Reverse Mortgage loans, look for the loan that provides the highest total loan amount. Remember you don't have to use all the funds available to you. And, you will only be charged interest on the amount taken or used. Obtaining a lesser loan amount now and then attempting to increase that amount later is generally not advisable, as well as costly since this would require another refinance with the associated closing costs.

	What’s a Reverse Mortgage?
	Who’s Eligibile?
	Uses of Reverse Mortgage Loans
	Top Reverse Mortgage Concerns
	Saying No to a Reverse Mortgage
	Adult Children Involvement
	Loan Approval Process
	Annualized Growth Rate
	Rates, Margins, Adjustments & Caps
	Loan Payout Options
	Types of Reverse Mortgages
	Comparisons
	Loan Closing Costs
	FAQ
	How Much Can You Borrow?

Education

Types of Reverse Mortgages

Reverse Mortgage loans have existed for about two decades. Ninety (90% ) percent of all Reverse Mortgage Loans today are HUD"Home Equity Conversion Mortgage" loans (known as "HECM" or "Heck'em" loans) which are insured by the Federal Housing Administration (FHA). The primary focus on the HECM loans is due to their overwhelming popularity. However, we also present Fannie Mae's "Home Keeper" Reverse Mortgage loan, as well as a few "Private Industry" sponsored Reverse Mortgage loans.

General Characteristics:

HECM (Home Equity Conversion Mortgage)

For the average USA home value, the HECM loan provides the highest cash payout
Unused balance of a credit line grows via the Annualized Growth Rate
FHA limits loan sizes by County and State, which limits the maximum you can borrow
FHA mortgage insurance (MIP) is required and guarantees you will receive your payments, even if the lender goes out of business
No Prepayment Penalties
Refinancing is allowed

Vital Concept 1

Age of the youngest borrower is used on loan amount calculation

Loan is non-recourse
HUD third party counseling is required

Private Industry Reverse Mortgage Loans

Loan limits are higher than the HECM and Home Keeper products
Used primarily for "jumbo" loans or homes valued in excess of $500,000
Unusual homes, excluded by HECM or Home Keeper, are better suited for this loan type
Mortgage insurance (MIP) is not required
Prepayment penalties may apply
Loan closing cost are generally lower
Interest rates are generally higher
Loan is non-recourse
HUD third party counseling is required

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