Silverboat - Reverse Mortgage Loans

Creating your own account allows you to store data, create a “crew list” to email data to others and if desired, to arrange a “crew meeting” over the internet and phone.

The Annual Growth Rate on the unused loan balance of a line of credit is a wonderful benefit to borrowers. In essence, the money available to you grows over time in the same manner as savings account. Review the definition of the Annual Growth Rate and call a Silverboat advisor for more information.

Fixed rate Reverse Mortgage loans are only available under a lump sum payout. This means the total loan amount less any costs is given to you at closing. Interest accrues or accumulates on the entire lump sum, verses a line of credit where interest is only assess on the actual amount of money taken out or used. Obtaining a Reverse Mortgage loan simply for a fixed rate option may not be a good idea unless you have a specific purpose to use all the monies from the lump sum proceeds.

Review each component of a Reverse Mortgage loan to determine which option is best for you. Start with how much money you can borrower from each loan program and then assess individual loan features such as the interest rate, index, margin, rate caps, annualized growth rate, prepayment penalties (if any), adjustment periods, and closing costs. Creating a checklist for the evaluation of loan features will aid in the decision process. Call a Silverboat advisor for help on this important issue.

A variable interest rate is one that may change at certain times depending on market conditions and the specifics of the loan program.

Interest rate may change every month.

Interest rate may change every six months

Treasury securities are government bonds issued by the United States Department of the Treasury.

The average secondary market certificate of deposit rates for one month.

London Inter-Bank Offer Rate.

A lender profit item. It is an amount added to the basic index, and then generally rounded up to the nearest 1/8th of a percent to establish the interest rate.

Limits the movement of interest rate, either up or down for the specified period such as one month, six months, or yearly. There is usually a "floor" or minimum rate identified.

The maximum the interest rate can increase over the life of the loan.

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.

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.

Education

Compare and Learn

Terms	FHA Monthly	FHA Annually	Private Bank Options	FHA Fixed
Interest rate	Variable	Variable	Variable	Fixed
Rate Changes	Monthly	Monthly	Six Months	Fixed
Rate Based On	One Year Treasury Plus Margin	One Year Treasury Plus Margin	Six Month Libor Plus Margin	Prevailing Market Fixed Rates
Caps on Rate Changes	No caps per change	Max 2% per Year Based on Start Rate	No caps per change	Not Applicable
Lifetime Rate Cap	10% above the Start Rate	5% above the Start Rate	6% above the Start Rate	Not Applicable
Mortgage Insurance	Yes	Yes	No	Yes
Subject to Loan Limits	Yes	Yes	No	Yes
Loan Payment Options	Lump Sum Line of Credit Payment for Life Payment for Term Combination	Lump Sum Line of Credit Payment for Life Payment for Term Combination	Varies Restrictions Apply	Lump Sum Only
Prepayment Penalty	No	No	Might Apply	No
Annual Growth Rate on Unused Cash Proceeds	Yes	Yes	Might Apply	Not Applicable
Overall	Most sought after program. Offers highest loan amount for average US home values	Higher initial rate but more stable. Generally has the lowest lifetime interest rate cap	Higher rates. Good for high-priced homes and larger loan amounts. Limited availability.	Fixed rate is a plus but borrower must take entire loan proceeds in a lump sum.

Helpful Tip 4

Alert 4

Vital Concept 2

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