Fighting Inflation with a Reverse Mortgage Refinance

According to the National Association of Realtors, 70% of 185 metro areas across the U.S. recorded a double-digit annual increase in their median single-family, existing-home sales price.

With home values climbing, now may be an opportune time for reverse mortgage borrowers to refinance.

A strategy for greater financial peace of mind

Many older Americans worry about outliving their retirement savings. If a client currently has a reverse mortgage, refinancing their loan may help them access additional funds that may now be available as their home equity has grown.

In addition, interest rates may have dropped since the borrower initially closed. Refinancing may offer a lower interest rate, reducing the amount of interest the lender adds to the loan balance, as well as slowing the rate at which the homeowner’s equity decreases.

Bottom line, refinancing a reverse mortgage can be part of a proactive financial strategy that helps your client live better and retire more freely.

Other reasons to check out reverse mortgage refinancing:

Their current reverse mortgage has an adjustable interest rate. Adjustable rates carry a degree of uncertainty as the interest rate fluctuates based on economic conditions. By refinancing to a fixed-rate reverse mortgage, borrowers gain the security of a locked-in interest rate.

A different type of reverse mortgage would better serve their needs. In higher-value homes, your clients may be limited in the amount of equity they can turn into a loan. A typical Home Equity Conversion Mortgage (HECM) has a maximum borrowing limit of $970,800, even if the home’s appraised value is greater. With the Equity Elite® program exclusively from RMF as the lender, the maximum loan amount is up to $4 million*.

Refinancing a reverse mortgage can be an effective hedge against inflation for the right candidates. Ask your Account Executive how RMF can help you grow your business with this opportunity.

*Not applicable in all states; MA imposes a maximum loan amount of $2MM. Visit www.reversefunding.com/equity-elite for details.

Timing is Everything: Talking to Your Clients About the Benefits of Taking Out a Reverse Mortgage NOW

Zillow’s home value forecast anticipates a 14.9% growth through March 2023. What does this mean for your older clients? If they own a home, now might a good time to leverage their home equity as part of their retirement financial plan.

With this increase, clients who previously weren’t good reverse mortgage candidates may want to take a second look at this retirement tool.

Changing the retirement game

By leveraging their home equity, your clients can acquire the cash flow they need to afford a comfortable retirement lifestyle. Key factors used to determine how much can be borrowed include:
 ·        Age of the youngest borrower
·         Current interest rates
·         The lesser of the value of the home or the FHA lending limit
·         Balance of existing mortgage, if applicable

This strategy can help maintain investments, increase the longevity of their portfolio and build a safety net for the years to come — but not if they don’t know about it. Why not mine your database for potential leads?

Reach out and reconnect
With your client data in hand:
·         Identify potential reverse mortgage candidates
·         Consider how a reverse mortgage may help solve their financial challenges
·         Break your audience into segments based on their needs
·         Share targeted messaging on how increased home values can offer them a reverse mortgage opportunity
 
Remind your clients of all the ways these funds can help create a more fulfilling and enjoyable future. And don’t hesitate to reach out to your Account Executive to learn how RMF can assist you.



 


A Reverse Mortgage for Younger Homeowners? Read on…

Many older homeowners and homebuyers age 62+ use reverse mortgages as a financial tool to gain more financial flexibility. But there’s also an option for homeowners and homebuyers as young as age 55!* At RMF, we offer an innovative line up of Equity Elite® products to help you write more business than the HECM alone. If you have clients age 55 or older in select states* that own or are planning to purchase a home, Equity Elite® may allow them to tap into more of their home's equity, sooner rather than later, and with lower upfront costs.

Big benefits for you and your clients

A larger pool of borrowers. Designed for customers as young as age 55 in select states means more eligible loan candidates.

Increased market size. Eligibility expands to non-FHA-approved condos, including age-restricted communities, so you can grow the condominium market up to three times the HECM program.

More savings for more clients. No upfront mortgage insurance premiums mean lower costs, making this option attractive to more clients on a fixed income.

Not just jumbo amounts. Borrowers are eligible for loan amounts from as little as $50K up to $4MM to free up more home equity to help clients retire comfortably.

An attractive alternative to a traditional HELOC. The Equity Elite® Line of Credit offers a reusable line of credit that grows at 1.5% annually for seven years and no pre-defined loan maturity date. There’s no prepayment penalty, more lenient income qualifications and a lifetime interest cap 5% over the initial rate.

Research shows that broadening eligibility to borrowers age 55+ increases market opportunity by 2.7 million eligible households! Take your business to the next level with a propriety product like no other. Get started by reaching out to your Account Executive.



*Available to borrowers as young as 55 in select states only. Higher minimum age requirements may apply.  For the Equity Elite (EE) loan option with a growth rate on a line of credit, there is a specific growth rate, such as 1.5% per annum (compounded monthly) applied to certain unused amounts, and a growth rate period, such as 7 years after the loan closes, as stated in the loan documents provided at closing. Also, the line of credit cannot exceed: (1) 75% percent of the original Principal Limit, plus (2) the growth of the available Principal Limit due to the growth rate.
†Not applicable in all states; MA imposes a maximum loan amount of $2MM. 
This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency.
Equity Elite Reverse Mortgage (“Equity Elite”) is Reverse Mortgage Funding LLC’s proprietary loan program, and it is not affiliated with the Home Equity Conversion Mortgage (HECM) loan program, which is insured by FHA. Equity Elite is available to qualified borrowers who also may be eligible for FHA’s HECM program or are seeking loan proceeds that are higher than FHA’s HECM program limit. Equity Elite currently is available only for eligible properties in select states. Please contact your loan originator to see if it is currently available in your state.
Upon a maturity event, any non-borrowing individuals with an ownership interest in the property, including non-borrowing spouses, will have a short period of time (for example, 30 days from a due and payable letter or an alternate time specified by the loan servicer if extensions are available under the circumstances) to purchase the property from the estate or, if the non-borrower inherits the property, pay the loan in full using any sources of funds available to them. Any non-borrowing individual, including a non-borrowing spouse, should have a plan to pay off an Equity Elite reverse mortgage upon the borrower’s death or any other maturity event. If the non-borrower is unwilling or unable to purchase the property or pay the loan in full, there is no protection for the non-borrower (including a non-borrower spouse) to maintain an interest in the home or to continue residing in the home past the maturity event and the non-borrower may be evicted upon foreclosure. The FHA HECM program has protections in place for certain non-borrowing parties, so a reverse mortgage applicant with certain non-borrowing parties should strongly consider a FHA-insured HECM loan (see HECM guidelines or ask an RMF representative for details).  Under the Equity Elite reverse mortgage loan program, a maturity and/or default event occurs when the last surviving borrower no longer lives in the home as his or her primary residence for at least 12 months, the property charges (including taxes, insurance, or any other property charges) are not paid, required repairs are not completed or the property is not maintained, or any other maturity and/or default event, as specified in the Security Instrument, occurs. L4757_082023

Selling a Home with a Reverse Mortgage: What Your Clients Need to Know

With home values soaring, reverse mortgages are increasing in popularity — the number issued in 2021 rose 29% over the prior year. More and more retirees who want to age in place are opting for one. But what happens if they decide to sell?

The good news is they can.


Truth be sold

Borrowers can sell a home with a reverse mortgage at any time. When they do, their reverse mortgage becomes due and payable.

During the life of the loan, interest and the annual mortgage insurance premium (MIP) accrue on the outstanding loan balance. This is due when the when the loan is repaid.

If the home’s value has appreciated, borrowers can sell it for more than what they owe and keep the difference. But what if its value has declined? Because of the loan’s non-recourse feature, borrowers never owe more than the home is worth. If the sales price matches the appraised value, the proceeds go to the lender, and mortgage insurance covers the difference.

An heir’s rights

When a reverse mortgage loan holder passes away, the loan must be repaid. Interest on the balance, as well as monthly insurance premiums, will continue to accrue until the loan is settled.

If the borrower’s heirs are actively working to sell the property, they’re entitled to request two ninety-day extensions beyond the initial six-month grace period to satisfy the loan. But extensions are not guaranteed, and they require specific documentation.

With the facts in hand, you can help your clients decide if obtaining a reverse mortgage is a smart move now and in the future. To learn more, reach out to your RMF Account Executive today.  


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