All Reverse Mortgage Lenders Aren’t The Same. The product is the same but there can be important differences. I write this to help you make a good decision when you decide to go the reverse mortgage route as my wife and I just did.
Kathleen and I went through an interesting process. First we decided to get serious about an over 55 community in Daybreak. The builder owned their own mortgage company and had incentives to use them. We went through the pre qualification process with their reverse mortgage loan officer. My preferred FHA and conventional lender has a reverse mortgage specialist and we considered them. I was approached by another lender who heard we were in the market and we considered him. Finally we considered Reverse Freedom and Chad Peck. We had been to an informational lunch presentation with Chad and were impressed.
If you follow the articles I post here you will likely remember that Kathleen and I owned a large mortgage company in Washington State. With that background I knew the reverse mortgage pluses and potential minuses and wasn’t prone to be turned off by the nay sayers with their “don’t do a reverse mortgage they are bad” comments. (Even from some of our children”). In situations like ours it is a perfect product.
The main reasons people choose a reverse mortgage are as follows: 1- To use their equity to create a monthly cash flow to supplement their monthly income. 2- To pay off a small mortgage, again having no monthly payment, thus eliminating the mortgage payment. 3- To purchase without having to pay for the entire purchase, again having no monthly payment. (The older you are the less you put down).
Our situation was #3. We didn’t want a monthly payment and we didn’t want to pay cash for the full purchase price. Here is where each lender we spoke with was different. How much we had to put down varied by as much as $40,000 from the least desirable option to the most desirable option, which turned out to be Reverse Freedom and Chad Peck.
In wanting to know why the difference I learned that interest rates charged determine the down payment. A reverse mortgage is an FHA guaranteed product. FHA/HUD set the rules as they do not want have to reimburse the lender for a foreclosure. I learned that the higher the interest rate the lender is charging (even though it is deferred indefinitely) the more cash equity you must have. So what created the $40,000 lower down payment for us was because Reverse Freedom was charging us a lower interest rate.
In important areas: All Reverse Mortgage Lenders Aren’t The Same
Because we selected Reverse Freedom we couldn’t compare the service, follow through, and competency one to another. I will say that I having closed over 5000 loans I am totally aware of what is quality in these areas. Top of the line service, follow through, and competency would be my description.
To reach Reverse Freedom you phone them at 801-921-4663 or Chad’s cell: 801-809-3872. Here is the link to their website: http://www.reversefreedom.com/
For other articles on this topic that I have written click here
Seniors – Is Your Current House The Right House?
For some this may open up an exciting new dream. The ideal person is over 62, home free and clear, healthy, and willing to dream about the yes, “dream home”.
In Salt Lake City it is pretty impossible to find a decent home for $300,000.00. There are first time home buyers out there scouring the new listings for such a home. Sadly, when one comes on the market so many are after this home multiple offers are the norm. So instead of finding the $300,000 home you are in a bidding war against what can be 30 competitors. Good bye to the $300,000 hope. Tooele County is the 7th fastest growing County in the US. Why is that? Prices. You get more for the money over there. However, my experience is that many won’t live there. So buyers remain renters in many cases. In others, they luck out and win the bidding war.
OK, lets say that you own such a home. Is this home really the right home for you? Does it take more yard care than you want? Is it a multiple level home and you are tired of stairs? Have you been online or to the Parade of Homes and dreamed of a new home, even a home you can’t afford?
Well, dream on senior citizen. Your current house, free and clear, can launch you into a new dream house with no new house payments. What? Yep!
First, take a look at what you can purchase for between $550,000 and $650,000, click here. These are all single level living homes.
So how do I pull this off for you with no payments. It’s with a government program for senior citizens. The program allows those 62 or older to put about 1/2 down and forego any mortgage payments. The older you are, the less you put down. For example: age 70 puts less down, 44.9%.
Because the program is not the norm, the common immediate reaction is NO, this isn’t for me. I suggest that if you do have a dream of a different home, open your minds to this program. I can help you decide if this is actually right for you. I can help you over your questions. I believe in this program. To me, it’s a wonderful solution for many, very many.
Seniors – Is Your Current House The Right House? It might not be. I can help you figure this out.
Larry Cragun – Windermere Real Estate
Residential and Condominium Professional.
I am posting this article because there is a place for reverse mortgages that can be a situation saver. Time Place Reverse Mortgage
There was a period of time that reverse mortgages were sold in a way that they harmed people. This resulted in a lot of negative press and word of mouth. They aren’t the cheapest loan to obtain when it comes to the cost to obtain one.
However, there are definite situations where a reverse mortgage is a life saver. Here are a few examples.
1- Problem: Three siblings, all over 62, have inherited their parents home. Two of them are living in the home and don’t want to sell or move. The third sibling wants them to sell or in some way come up with her share of the homes value. As things are with the two occupying the home there is no way to do that. There seems to be no acceptable solution.
Reverse Mortgage to the rescue: The home is free and clear. The siblings living in the home can secure a reverse mortgage to pull the cash out for their sister. It is even possible that the two living in the home still have the ability to receive a monthly payment from the reverse mortgage.
2- Problem: A retired couple has a rental home with a small mortgage on it. (About 25% of its value) They also have a line of credit on a home they purchased to be there principle place of residence. They are thinking that they need to sell the rental property but doing that only pays off a portion of their total debt. There isn’t enough equity to bring them free and clear, void of all monthly mortgage payments. They wish to relieve themselves of any monthly payments.
Reverse Mortgage to the rescue: When they sell the rental property it leaves them short of being debt free. However, they aren’t that short. Their cash receives will pay off the rental and significantly pay down their primary residence. This amount of equity allows a reverse mortgage to pay off the loan on their primary residence and would even provide monthly income for the rest of their lives.
3- Problem: A senior coupe is renting. Their cash reserves are such that they do not want to part with the amount that it would take to buy the home they want and have no mortgage. Having no monthly payments would be a relief.
Reverse Mortgage to the rescue: Depending on their ages it might be less, but a reverse mortgage only requires the couple to put half down.(this is an approximate) The older the youngest of the couple is the less they put down. Yes, I said that, no monthly payments.
Many times I have mentioned reverse mortgage to a senior friend. Most of the time they quickly reject the thought. There is much misinformation in peoples minds.. The feds stepped in a few years ago to curb the abuse that hit many. Truly, there are times when the best solution and maybe the only solution for folks was a reverse mortgage.
There are a lot of questions to ask that I don’t cover here. Contact me and I will help you figure them all out to see if it is the answer for you, a friend, or a family member. I can refer you to a dependable reverse mortgage specialist.
Not all condo projects are approved by FHA. This article addresses why FHA condo approval is important and I list condominium properties that are approved in Salt Lake City./
An FHA approval is valid for two years and must be renewed to remain valid. Some properties just let an approval lapse and don’t bother with the process to update that approval. Some submit an incomplete package to FHA.
FHA approval involves analyzing minutes of meetings, study of financials, determining the percentage of owner occupied vs rentals, understanding legal issues such as law suits, and a basic determination as to the safety in warranting a loan made on the property. Condominiums carry greater risk to a lender due to the community control rather than a single owner.
To me FHA approval is extremely important as the FHA review offers a more thorough review than done by a normal due diligence. I don’t claim non approved properties are to be rejected, I do suggest they require a deeper look into those important factors that FHA studies. I even suggest using an agent that is experienced in condominium sales and that is familiar with the risks each building offers.
Kathleen and I have lived in five condominiums during our marriage. We see the benefits. The older we became the more we loved the benefit of condo life. There are benefits beyond what I call “lock and leave” which is a benefit for sure.
One benefit some of our clients have taken advantage of is the FHA reverse mortgage. The FHA reverse mortgage allows someone age 62 to purchase with about 50% down and have no payments, ever. Another application is to own a condominium, having equity and use it to acquire a monthly income.
Another benefit is that an FHA guaranteed loan makes it easier to purchase with a lower (3.5% down payment and a more forgiving credit approval process)
As of this writing the following are Salt Lake City FHA approved condos. (remember it is a two year approval)
Angelina’s Corner – Application was rejected. Missing documents or incomplete package submission
American Towers, not approved. Application was rejected. Missing documents or incomplete package submission
Arlington Place – Approved -1/31/2018
Aztec – Approved 05/31/2017
Belvedere, not approved, Rejected: Missing documents or incomplete package submission
Belmont Downtown – Approved 6/12/2017
Belmont Plaza – Expired 2/5/2017
Bonneville Towers – Rejected 11/18/2016
Broadway Park Lofts – Approved 12/27/2017
Broadway Tower – Approved 9/2//2016
Canyon Road Towers – Approved/8/23/2018
City Crest – Expired 2011
Garden Grove West Jordan: rejected insufficient reserve funds.
Garden Park South Jordan – approved 3/8/2017
Garden Towers – Expired 1992
Governors Square: Rejected 2013
Library Square – Nearing expiration 4/7/2018
Market Street – Rejected
Northridge Heights – Expired
One and Nine – Expired
Panorama – request withdrawn 4/4/2017
Parc Gateway – Approved 6/28/2016
Pierpont Lofts – Expired 6/12/2105
Rockwell – Application rejected
Terrace Falls – Expired 2012
Trevi Towers – approved 12/1/2017 – Rejected Missing documents or incomplete package submission
Trolley Place – approved 2//8/2018
Trolley Regent – Expired 2011
To get to the FHA site with access to the complete up to date search CLICK HERE
Is Your House A Nice House But Not The Right House?
First a few examples to make my point:
- The owners are happy with their home. They have lived in it for decades. They raised their children in it. However the master is upstairs. I’ve had clients that struggled with is this the right house for this and finally after the husband had a stroke they decided that they needed the right house. We don’t know if climbing to the upstairs bedroom was a factor in the stroke happening. We do know it would have been easier to sell and move prior to the stroke.
- The home is modest and paid for. The owners are over 62. They were exposed to the special FHA program for those over 62 and discovered they could buy the home of their dreams and have no mortgage payment. At first it seem too good to be true. Their equity was all that was needed. They could even pull some cash out in the transaction. I used to own a large mortgage company and do understand this program.
- I have had about 55 transactions in the last 2+ years for this scenario: downsizing to a lock and leave or as my broker says, low to no maintenance living. These are people whose nice home is now actually not the right home as their is just too much maintenance with the size of home or the difficulty in maintaining it and/or the yard.
Is it time to consider the right home? Is it time to become informed on the options? One of the common things I am told about working with me is that there is no pressure. To me it’s important you do the right thing, find the right home or situation for your wants or needs. OK, give me a call, let’s explore the possibilities. I am good at this. Larry Cragun: 801-923-4735 or 206-618-3724 which also takes text. Email: firstname.lastname@example.org