When it comes to securing a reverse mortgage for purchasing a home, getting rid of mortgage payments or supplementing retirement income, you need experts on your side. Maggie O’Connell has the experience and expertise to guide you through the options, efficiently assist through the loan process, offer competitive rates and terms and provide accurate answers to all of your questions. Scott O’Connell, Maggie’s son, is now a member of this dynamic reverse mortgage origination team. We offer HECM & Proprietary Reverse Mortgages in Nevada, California and all 50 United States!
Maggie lives and works in Reno, Nevada and Scott is in Northern California. Maggie began her career in reverse mortgage origination in 1992 first in San Luis Obispo and then in the Bay Area of California. Both take the time to understand our client’s needs and financial status so they benefit from the best program for them and an efficient loan process.
“We will put our many years of Reverse Mortgage experience and expertise to work on your behalf!”
So you’re considering a reverse mortgage because you have decided that life is too short. You have equity in your home and you should be enjoying life more. Where do you start? What is the first step? How do you choose the person who will help you through the process? You certainly don’t what to be led down the wrong path by some newbee in the industry who doesn’t know what they are doing. You thought one of those big companies who advertise on TV are the way to go, after all, they are big! But after talking to someone on the other side of the country who wants to sign you up and pass you along the processing assembly line, you realize that’s not for you.
Congratulations! You have found THE O’CONNELL TEAM who will work with you from start to finish, who represents a federally chartered bank, who has many years experience originating HECM’s and hundreds of raving fans. Professionals located in Northern Nevada and Northern California and give you the personal attention you need in such an important transaction as a reverse mortgage.
This is great news for older homeowners with higher value homes. The new maximum claim amount of $970,800 is an increase from $822,375 this past year. The maximum claim amount is the highest home value we can use to calculate HECM proceeds. Proceeds for the loan are based on age of youngest borrower and expected interest rate. With interest rates still very low and home values very high, this is a great time to secure your reverse mortgage.
To determine the amount available to you call Scott at 775-204-3390
FHA has made a few changes recently to the HECM reverse mortgage program. HUD will no longer require the entire Condo Association to have FHA approval. HECM borrowers will be able to submit their single unit condo for approval. We will start with a questionnaire to find out if your unit may qualify. This opens the door for condominiums for reverse mortgage purchase and refinance. I will provide the questionnaire to you upon request. Find out upfront if your condo qualifies!
Another recent change to note is in the Initial Mortgage Insurance Premium (IMIP) and the Annual or Ongoing Premium. The IMIP is now 2% of the home value up to the maximum claim amount of $970,800 for all borrowers. Previously, cash draws under 60% of the principal limit carried an initial mortgage insurance premium of .5%. This results in a savings for borrowers who have high draws and a cost increase for those with draws or lien payoffs below 60%. The ongoing or annual mortgage insurance premium as dropped from 1.25% to .5% on the loan balance. Of course, this is a great improvement for borrower’s who carry high mortgage balances and results in a full accrual rate that is competitive with conventional and other FHA loans.
Another important change is, HUD lowered the 5.06% floor to 3%. The reason this is important is that lower margins and rates result in larger principal limits or funds to the borrower. So now it’s more important than ever to get multiple quotes as the margin not only reduces the interest rate charged over the life of the loan but also directly impacts the amount you receive.
What is a HECM Reverse Mortgage? It is home loan designed for older homeowners. It allows borrowers to tap into the equity in their home without having to make monthly mortgage payments. Simply put, it is a deferred payment loan. Commonly known as the Home Equity Conversion Mortgage (HECM) it is insured by the FHA through the Department of Housing and Urban Development (HUD). The loan balance is repaid when the last remaining homeowner leaves the home permanently, sells the property or passes away. Homeowners maintain title and continue to pay their own property taxes, homeowner’s insurance and keep up the maintenance of the property. Just like regular mortgages, the reverse mortgage lender has a lien against the home. To be eligible, at least one borrower must be age 62 or older, must have title to the home and significant equity or the ability to bring in funds to create enough equity and the home must be the principal residence. With the HECM for Purchase program, equity is generated by bringing funds to closing. Eligible properties include Single Family Residence, 2-4 unit properties, townhouses, condos that meet the FHA spot condo approval and manufactured homes that meet FHA requirements including an acceptable foundation report.
Home equity is often the most valuable asset for most Seniors and Boomers. By tapping into home equity and receiving tax free funds to boost retirement income, homeowner’s are able to live a more comfortable and financially secure lifestyle.
To qualify for a reverse mortgage, one must be at least 62 years. In the past, when there was a younger spouse, the couple did not qualify for the HECM. While it’s best for both husband and wife to both be on the loan, there are now protections for younger spouses. The younger spouse has the right to remain in the home indefinitely during what’s called a deferral period if all the requirements are met. (more…)
We now have a financial assessment for HECM reverse mortgage borrowers. HUD calls for HECM lenders to evaluate the borrower’s willingness and capacity to timely meet their financial obligations and to comply with the mortgage requirements,” We review history of paying property taxes, homeowner’s insurance, HOA dues and consumer debt. In the past we had found that some borrower’s were still unable to meet their financial needs even after receiving the HECM and ended up in trouble with property taxes and other homeownership requirements. As a result, HUD suffered losses and lenders had to advance funds to make these payments. Implementing the Financial Assessment guidelines resulted in a safer program for everyone involved. We are assured borrowers can afford to continue to live in the home and pay obligations.
The qualification is not the same as a normal mortgage loan as we use a residual income method based on your income, family size and the region of the country where you live. Satisfactory credit includes making all housing and installment payments on time for the previous 12 months and no more than two 30-day lates in the past 24 months. And no major derogatory credit on revolving accounts in the previous 12 months. But with extenuating circumstances that can be explained and documented, we may be able to set aside funds as a tax and insurance reserve account, called a LESA (Life Expectancy Set Aside). The formula is based on current property taxes, homeowner’s insurance premiums, expected interest rate and life expectancy of the youngest borrower.
For the complete HECM Financial Assessment and Property Charge Guide, Click Here
A reverse mortgage for purchase allows you to take out a reverse mortgage within your purchase transaction. You must have a large enough cash down payment to meet the HECM loan amount based on the youngest borrower’s age and current interest rate. And you need to meet income and credit requirements and since there are no mortgage payments to make, those requirements are easier than traditional mortgages. There has been a big increase in the use of HECM reverse mortgages in Nevada as Real Estate Agents and buyers recognize the benefit. Sellers are now more willing to accept offers with Reverse Mortgage financing as it is now more mainstream. Get into your new home at a Nevada Active Adult Community 55+, or downsize and put money in the bank from the sale of your larger home. Option open up to you with this helpful program. Learn more: HECM for Purchase FAQ HECM for Purchase Guidelines
The new monthly adjusting CMT (Constant Maturities Treasury Index) is now available in all states. Enjoy the current low variable interest rates with a 5 point lifetime cap above the start rate for the monthly adjusting option. This option is very popular as a line of credit or monthly payment (tenure or term) option is available and borrower’s have access to full principal limit on the second year.
The fixed rate option offers an interest rate that does not change over the life of the loan. The expected interest rate has a direct impact on the amount available to the borrower. Contact Maggie for current rates.
Let me explain how the amount available to the reverse mortgage borrower is calculated. There are three factors involved in the reverse mortgage calculation: 1: Age of youngest borrower 2: home value or maximum claim amount (current maximum is $970,800) and 3: expected interest rate. The expected rate is used for calculation purposes as an indication of what rates are expected to be over a longer period of time. The accrual rate uses the CMT or Constant Maturity Treasury index. The index is added to your margin and determines the interest rate charged on the outstanding reverse mortgage loan balance. But the expected rate determines how much you will receive from the reverse mortgage or HECM.
Jumbo reverse mortgage interest rates are fixed with a lump sum draw and also variable rate options that provide a line of credit. We will provide detailed quotes so you can select the best rate option for you.