Reverse Loan Program | The Riley Home Team

HECM
Home Equity
Conversion Mortgage

We offer a type of Reverse Product known as a Home Equity Conversion Mortgage (HECM) which is for homeowners and homebuyers age 62+. This loan program is federally insured and allows the borrower to convert a portion of the home’s equity into cash. Deferring repayment for as long as they live in the home and pay the property-related taxes, insurance, and upkeep expenses. The loan proceeds are tax-free* and can be used for just about anything. Additionally, a consumer protection is in place removing any recourse to the borrower or estate in cases where the loan balance exceeds the home’s value.

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What a reverse mortgage IS:

What a reverse mortgage IS NOT:

A loan that converts equity to cash for many different uses

A Reverse HECM will pay off existing home liens without the requirement of making a monthly payment. This alone will increase cash flow plus there could also be an opportunity to take out a lump sum, begin a line of credit that can be drawn when needed, and/or receive set monthly payments. Whether you are in a great position financially or in need of a life preserver a Reverse Mortgage will make a difference.

Not: a sale or lifetime commitment

The deed is still in your name so you can move whenever you want. Most reverse mortgages are federally insured through the FHA. As long as you pay the property taxes, homeowners insurance, and maintenance costs your home cannot be foreclosed on. We must honor this commitment for life or as long as you live in your home. However, you are allowed to change your mind and sell the home whenever you want if you wish to move to warmer climates, a smaller home, or closer to your children, whatever your choice may be. Only you will make the decision, not the lender or the government.

Why it doesn't pay to wait to set up a

Reverse Mortgage Loan

For the large majority of Americans, their home is their largest asset. Nearly all believe the only way to tap into the equity is to sell, many consider this out of the question, or complete new financing in the way of a HELOC or Cash Out Refinance. Both financing options can come with a higher payment which typically defeats the purpose. We have a fantastic solution to this predicament by strategically using a HECM as part of a comprehensive retirement plan. In most cases, retirement will be OPTIMIZED by utilizing this incredible product!

The Ultimate Multi -Tool

HECM Solutions

Eliminate Required Monthly Mortgage Payments (must pay taxes, insurance, and maintain home)

Pay for long term care

Access line of credit during market downturns

Pay for healthcare expenses

Portfolio preservation

Maximize tax implications

Increase cash flow

Put home equity to work

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How is the loan amount determined?

The loan amount is based on the value of the home, the age of the youngest borrower, and the interest rate offered
Why do I have Mortgage Insurance?

Mortgage Insurance is federally mandated and protects you and your heirs. It assure you will have access to your funds even if the balance of the loan exceeds the value of the house and protects against being liable for more than the value of the house.
Will the property taxes, homeowners insurance, and homeowner fees such as an HOA be included in the loan?

No, you are will be responsible to pay these outside of the loan.
What if I want to leave the house to my heirs?

The heirs or estate can: Sell the property and use the proceeds to pay the loan balance and keep any remaining equity; Use personal funds or gifted money to repay the loan; Purchase the property for 95% of its appraised value; Provide the lender with clear and marketable title to the home through a “deed in lieu of foreclosure.” If the borrower’s heirs or estate do not want to take responsibility for selling the property, or purchasing it, the person authorized to act on behalf of the borrower’s estate can provide a “deed in lieu of foreclosure” to the loan servicer and avoid an actual foreclosure.
If you are married, will your spouse be a co-borrower on your loan?

Borrowers must be at least 62 years old, named on the title of the home, and use the home as their principal residence. Spouses who do not meet these criteria cannot sign the HECM reverse mortgage loan documents as a borrower and will be identified as either an eligible non-borrowing spouse or an ineligible non-borrowing spouse depending on certain additional criteria.
What if your co-borrower survives you?

If both spouses are borrowers, the HECM reverse mortgage features apply equally to both spouses even in cases where one spouse survives the other.
What if your eligible non-borrowing spouse survives you?

When the borrower passes away, an eligible non-borrowing spouse who follows the requirements may be able to defer repayment of the loan and continue living in the home, but they will not be able to receive any remaining loan proceeds and they must continue to meet the obligations of the loan.
What if your ineligible non-borrowing spouse survives you?

An ineligible non-borrowing spouse would not be able to defer repayment of the reverse mortgage loan.
Will how I choose to receive my loan payments affect my interest rate options?

You can always get a variable rate with a HECM ARM, regardless of how you receive your payments from the loan-whether by way of initial draw at closing; a line of credit; or fixed monthly advances. However, if you select a fixed-rate HECM, you will only be able to take a single, lump-sum disbursement at closing.
How often do the HECM ARM rates adjusts?

With a HECM ARM, the rate either adjusts on a monthly basis or annually-it is your choice.
Are there caps on how high the HECM ARM interest rates can rise?

First, let's define two important terms regarding the restriction of movement with interest rates: "lifetime cap" and "periodic cap." - A lifetime cap restricts the movement of an interest rate over the life of the loan. - A periodic cap restricts the movement of the interest rate during a particular period of the loan (e.g .. from year to year). Currently, monthly-adjusted HECM ARMs do not have regulated cap structures. Here at Fairway, we do not offer them with a periodic cap, but we do offer them with a lifetime cap of either 10 percent or 5 percent. Annually-adjusted HECM ARMs do have regulated cap structures: the rate cannot move more than 2 percent, up or down, from year to year (periodic cap), and no more than 5 percent, up or down, from the starting rate over the life of the loan (lifetime cap).
What index is currently used as the variable rate in HECM ARMs?

Today, the actual interest rate on a HECM ARM is linked to the 1-year CMT (Constant Maturity Treasury) index. The expected interest rate, which is used to calculate the proceeds initially available to you from the loan, is linked to the 10-year CMT index. The CMT is determined by the U.S. Treasury and the Federal Reserve (note: from 2008 to 2020, the LIBOR index was used).
How is the actual interest rate on an HECM arm determined?

With both annually-adjustable and monthly-adjustable HECM ARMs, the interest rate is the sum of the lender margin plus the appropriate index rate (currently the 1-year CMT). After the loan is established, the lender margins will never change, while the CMT portion of the calculation will adjust overtime based on the market conditions.
Does a Reverse Mortgage Affect Any Government Assistance?

A reverse mortgage does not affect regular Social Security or Medicare benefits. However, if you are on Medicaid or receive Supplemental Security Income (SSI), reverse mortgage proceeds may affect your benefits.