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Reverse Mortgages

Reverse Mortgages

Reverse Mortgages: Gustan Cho Associates

Reverse Mortgages Defined

Reverse Mortgages, also known as Home Equity Conversion Mortgages,  is a government loan program offered by the Federal Housing Administration where a homeowner who is 62 years  old or older and who has equity in their homes can qualify.  Many seniors who are 62 years old or older may be retired and have limited income but have equity in their homes. To qualify for traditional mortgage loans these days, sufficient income is required and many people on retirement do not have enough income to qualify for a home loan.  With people living longer, many seniors are limited on social security income and deplete their savings and cannot do a cash out refinance even though they have a lot of equity in their homes or their homes being paid off.  If they have sufficient equity in their homes, they can now do a reverse mortgage where they can cash out refinance and after the refinance, they no longer have to make a single mortgage payment.

Benefits of Reverse Mortgages

There are many benefits for Reverse Mortgages.  The main benefit and advantage of Reverse Mortgages is that the homeowner does not need to make a single mortgage payment for the rest of their lives.  The homeowner is responsible for their property taxes, homeowners insurance, and homeowner association dues ( if any ).  If the homeowners has a home that is paid off or has sufficient equity, they can cash out on their reverse mortgage refinance and use the cash out for unexpected expenses such as health care, home improvements, and investments.

How Do Reverse Mortgages Work?

  • With a reverse mortgage, the homeowner can continue to live in their home and hold title to their home.

  • If you refinance through a reverse mortgage, you can pay off any existing liens on your property and no longer have to worry about making another mortgage payment for the rest of your life.

  • Homeowners do not have to make mortgage payments for the rest of their life as long as they live in their home, however, homeowners need to be current with their property taxes and homeowners insurance and maintain their home in good condition.

  • All closing costs on reverse mortgages such as FHA Mortgage Insurance Premium, title charges, recording charges, transfer stamps and other costs and fees can be paid by a lender credit or financed into the mortgage loan so their is no out of pocket expenses from the homeowners.

  • Cash out reverse mortgage proceeds are tax free.

  • Your social security and medicade benefits will not be affected by doing a reverse mortgage loan.

  • All Reverse Mortgages are non-recourse mortgage loans which means that you, as the homeowner, and the heirs of your property are not liable for any debts that surpasses the value of your home.  What this means is that in the event if you die and the home gets sold and the reverse mortgage loan balance is higher than the sale price of your home, your heirs are not responsible for the shortage. If the property sells for a profit, then the profit after paying off the reverse mortgage goes to the heirs of your property if you pass.  There are no pre-payment penalties on Reverse Mortgages so you can sell your home anytime.

Factors to be aware of on Reverse Mortgages

  • Reverse mortgage loan balances will increase as time passes and mortgage interests will increase as time passes.

  • If the homeowner of a reverse mortgage chooses a home equity line of credit, as the line of credit is used, the equity in their homes will get decreased and less assets will go to the heirs of the property once the homeowner passes.  Reverse Mortgages are normally paid off after the sale of the home or refinancing the reverse mortgage into another loan.

  • Normally mortgage rates on reverse mortgages are higher than mortgage rates of traditional mortgage loans and fees and costs in the origination of reverse mortgages are higher as well.  Due to the higher fees and costs of reverse mortgages, reverse mortgages are not recommended for homeowners planning on not staying in their homes for at least 5 or more years.

  • Reverse Mortgages come due when the homeowner passes away, does not live in the property anymore for 12 or more months, or the homeowner does not pay their homeowners insurance and/or property taxes.

How Much Cash Out Can You Get From a Reverse Mortgage?

There are factors on how much you can cash out on a reverse mortgage. Factors depend on the age of the homeowner, the value of the property, and the maximum loan limit depending on the county your home is located.  For a no cost free consultation to see how a reverse mortgage may benefit you, contact Gustan Cho of Gustan Cho Associates at 262-716-8151 or email Gustan Cho at GustanCho@Outlook.com.  You can also visit Gustan Cho Associates at www.gustancho.com.

Become a Private Money Investor with Proceeds from Reverse Mortgage

Qualified homeowners can get a cash out reverse mortgage and invest the cash proceeds with Hard Money Capital Group as a private money lender.  Private money lenders normally make 10% to 12% return on their money by lending to real estate investors and your money is secured by real estate.  Hard Money Capital Group does everything for you from processing, underwriting, funding, and servicing the private money loan.  Reverse mortgage loan borrowers normally pay 5% on their loan balance of their reverse mortgage loan but can yield 12% from lending their money to hard money borrowers and net a 7% return.  It is a great way of making income by becoming a private money investor.  You can contact Michael Kaleikini, President of Hard Money Capital Group at GustanCho@Outlook.com for more information or you can call 262-716-8151.

 

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