Signature RM Blog

Perhaps you’ve already been on line, or you’ve spoken with your friends and colleagues, or you’ve asked about it around town, but you’re just not sure yet.

This is where Signature Reverse Mortgage can help. We give clear and straightforward answers. We’ll help you make a solid decision, based upon YOUR needs and YOUR situation.

Here’s how the process works:

1) Over the phone Interview and Calculations:

Get your questions answered on the spot with our professional advisor staff. The internet only leaves people with more questions. We’ll give you immediate answers!

2) Face to Face Consultation with Signature:

We want to meet with you and do this face to face. Your future is at stake. Surely this deserves more attention than a telephone transaction!

3) Third party counseling:

This is often done over the phone. Our clients tell us that this is a repeat of all the valuable and comprehensive information that we’ve already given them!

4) Face to Face Application:

Have you seen the application packages that our competitors send out? An inch or two of paperwork, and your only contact is over the phone!

At Signature, we bring the application to you, and we’ll fill it in WITH you, and then leave you with the information and disclosures that are required. We’ll even do any copying you might need!

5) Appraisal:

A local appraiser will come out to appraise your home.

6) Underwriting:

We handle all the details.

7) Closing:

The closing can take place at the title company, at Signature’s offices in Bloomfield, in the comfort of your home, whatever works best for you. And I or one of my advisors will be on hand.

8) Follow Up:

This is another area where Signature excels Ask any of our clients whose names are provided: Our follow up is second to none! And considering that questions and concerns always arise, you’ll feel much better since you know us personally, you can always reach us, AND we’re local!

Signature RM:

Your Michigan source for the best, most personal and professional reverse mortgage available!

I wish I could take credit for this article. This is what we have been teaching customers at our seminars. I have posted the Article below.

To view the entire article, go to http://www.kiplinger.com/magazine/archives/2009/08/reverse_mortgage_rescue.html

Signautre RM

Reverse for Purchases

Signature RM is making reverse loans for seniors to purchase homes. Picture this: You make a down payment on a home, move in, and never have to make another payment again for as long as you live there.  Definitely a great way to go for retirement, and it'll certainly stretch your dollars too.

It’s still possible to retire in Michigan. It just takes a few more tools and a little more practicality than before.

Time was when you could chart your retirement course and all the options and decisions were obvious and appealing.

We all know that the landscape has changed however. That’s why more and more seniors are turning to their Michigan real estate to help fund their retirement.

In light of recent market movement, many retirees’ nest eggs have been reduced. In order to prolong the life of their investments, it’s essential that these seniors stop invading their principal, so that their investments and assets can recover.

Now I love my home as much as the next guy, but I realize that a home with a reverse mortgage on it will continue to appreciate: However a liquidated retirement fund will never recover. Using the reverse mortgage, you can keep more money under management, at a time when assets should be preserved.

And the flip side is that you won’t be paupering yourself to pay off a depreciating asset, Michigan real estate.

As for most seniors' desire to leave a legacy to their kids: First, the kids will be better off with a liquid investment portfolio than an illiquid home to sell into the market. And of course, they’ll still have ownership of the home and its equity for when this market recovers.

A recent client provides a perfect example of the numbers involved here. They hold an investment portfolio worth approximately $450,000. Based on life expectancy and their monthly needs, they’ll burn through their nest egg by the time they hit 87. The problem is that our client’s grandfather lived to be 92, and his father lived to be 90.

Part of the $3000 that my clients draw each month goes towards a $700 mortgage payment. That same $700 per month, left to compound at 5% over 20 years amounts to $287,000. This is money that has been left to grow in the portfolio! This is money that extends their nest egg horizon beyond their life expectancy!

It’s a proven fact, a reverse mortgage will cost less then a used up and exhausted portfolio. And with this strategy, your client will slow the drawdown of their principal to positively impact their net worth and long term financial well-being.

And that means a lot of beautiful days retired in Michigan!

Doug Browne, Signature RM

Signature RM presents informative seminars geared to help senior citizens map out a plan for their retirement years.  Using the Reverse Mortgage as part of a 'rainy day' strategy, Signature is helping senior citizens to control their lives, especially in today's challenging world.

Come join us to learn about this important financial option.

Topics of discussion include:

• Keep your home AND keep your savings.
• Eliminate monthly mortgage payments.
• Receive tax-free monthly cash flow or take a lump sum payment.
• Common misconceptions about the reverse mortgage.
• Impacts on your medicare / medicaid / long term care plans.

Upcoming Reverse Mortgage Seminar Schedule:

June 3, 2009 – Bloomfield Hills
June 4, 2009 – Waterford Twp
June 10, 2009 – White Lake
June 17, 2009 – Bloomfield Hills

Call us to register at (248) 406-3213

If you are unable to attend one of our seminars, we can provide a private consultation at your convenience.

You can also visit us at the following locations:

June 10, 2009 – Northville Senior Picnic
June 18, 2009 –Dublin Center Expo

We look forward to seeing you there. 
 

110,000 People took out a reverse mortgages last year. And with the new higher loan amounts now available, that number is expected to double for 2009. The reverse mortgage has become a viable and integral tool for many retirees as they structure their retirement plans. The NEW LAWS HAVE LOWERED FEES as well. The average client will have fees and closing costs that are the same as traditional mortgages.  Call today for more information regarding Reverse mortgages at (248) 406-3213.

Reverse Mortgages are almost completely misunderstood. Years ago, before Reverse Mortgages were heavily regulated, many private Lenders deceitfully took the title in Senior's homes or had appreciation clauses, in which the lender also took a percentage of the appreciation of the home in addition to the balance owed.

Due to these dishonest practices, the federal and state governments stepped in to regulate Reverse Mortgages and developed new loan programs.

Since the late 1980s, Reverse Mortgages have become the most regulated mortgage loan programs in the country. The distasteful practices of some lenders over twenty years ago have lead to many myths and misunderstandings of today.

These are common myths on Reverse Mortgages:

Myth #1 – The Bank Owns Your Home.

This is the most common misconception. You own your home and keep title as long as you own your home, just as you did or are still doing with your traditional mortgage. Once you permanently move out of your home or pass it on to your estate, the loan must be repaid. A Reverse Mortgage is to be paid when a property is sold. You keep the net proceeds from the sale of the property just as you normally would with any real estate sale. The Bank never wants to own your house.

Myth #2 – You Must Own Your Home “Free and Clear” to Qualify For a Reverse Mortgage.

You need to have equity in your home as it is the equity you are borrowing against. One of the benefits of a Reverse Mortgage is that it can be used to payoff your current mortgage so you can live payment free. You can even use a Reverse Mortgage to purchase a home and live payment free.

Myth #3 – You Won’t Qualify Because of Poor Credit.

A Reverse Mortgage works differently than a traditional mortgage. As you do not make any payments as long as you live in your home, your credit history is not important. You can even use a Reverse Mortgage to pay off a bankruptcy or get out of foreclosure and save your home. More Seniors find themselves in desperate finances than you may think; as fixed income has not been increasing nearly as fast as the cost of health care, electricity, property taxes, home insurance, car insurance, etc., has been rising.

Myth #4 – You Don’t Have The Income To Qualify for a Reverse Mortgage.

Reverse Mortgages work the opposite of traditional mortgages and give you income versus using your income to make mortgage payments. Traditional mortgages require that you have the income to qualify for the loan, as you must make monthly mortgage payments to the Bank to pay the loan back. As you do not make any mortgage payments with a Reverse Mortgage until you leave your home, you do not need income to qualify. With a Reverse Mortgage, the Bank pays you versus you paying the Bank.

Myth #5 – You Will Not Have An Estate Left For Your Heirs After The Reverse Mortgage Is Paid Off.

This situation is almost impossible. The formula used to calculate the Reverse Mortgage loan amount you qualify for was developed by and with the federal government, and is very conservative to insure that this doesn’t happen. Many borrowers first worry about a Reverse Mortgage bleeding the equity in their home dry, later wish they could get more money once they understand the conservative figures. However, these formulas are as a protection for you and the Bank. As Reverse Mortgages are non-recourse loans, you can never owe more than the value of the property.

Myth #6 – If You Owe More Than Your House Is Worth, Your Children Have To Pay It Off For You.

Reverse Mortgages are non-recourse loans as a protection measure for both you and your heirs. Unlike traditional mortgages, where you owe the balance regardless of the value of your home, you and your heirs are never responsible for more than the value of the home no matter how much you owe. The chance that your balance with a Reverse Mortgage will exceed your home value is very unlikely. There would need to be a drastic reduction in property values for this to occur.

Myth #7 – Once You Use Up Your Equity, They Cut Your Payments Off.

It is unlikely that your loan balance will be more than the value of your home. Even if your loan balance is more than the value of your home, the Bank must continue to make payments to you with the government insured Reverse Mortgage programs. If you lived to be 150 years old, or your home became worthless, the Bank is still required to keep making payments to you as long as you live in your home.

Reverse mortgages: the basics

Who's eligible? Reverse mortgages are loans secured by the home that do not need to be repaid until the borrower dies, sells the home or moves out permanently. To get a reverse mortgage, you must be at least 62 years old and own your home, which must be your primary residence. There are no income requirements. It's OK to have an existing mortgage, but you must be able to get enough from the reverse mortgage to pay it off. You remain responsible for home maintenance, taxes and insurance.

What's the process? You need an appraisal and inspection, just as you do for a traditional mortgage. Counseling is mandated for government loans. "It's important to completely understand how the loan is structured," says Linda Altman, president of Customer First Mortgage in Orange Park, Fla.

What are the loan options? There are two basic types of loans: the HECM, which accounts for 90 percent of the market, and private reverse mortgages without federal mortgage insurance. "The HECM is still the gold standard," says Shelley Giordano of Wells Fargo Home Mortgage. "It's the most versatile product and best for most people."

HECM loans are insured by the U.S. government; with a private loan the lenders assume the risk. You can never owe more than the value of the home when it's eventually sold—if the value declines, the shortfall is covered. The main drawback of a HECM is that the Federal Housing Authority caps the appraisal, which affects the loan amount. Currently, the loan limit differs from county to county, from $200,160 to $362,790, but Congress may raise that to a single national limit of $417,000, or even higher.

Borrowers with more expensive houses sometimes turn to private loans, even though the costs may be higher. Ron and Carolann Prast of Scottsdale, Ariz., wanted to get out from under the weight of their monthly mortgage payment. They turned to Bank of America when they were told that a HECM would give them only about 45 percent of their home's $540,000 value. "With Bank of America we got about 65 percent," says Prast, 74, who continues to work part time as an accountant.

How much can you get? That depends on the home's value, location, interest rates and the age of the younger borrower if there are co-owners. You won't get anywhere near the appraised value of your house—expect between 50 and 70 percent. What's more, appraisal and legal fees, origination fees, mortgage insurance premiums and monthly service fees come off the top.

The loan can be taken in a lump sum, as monthly payments, as a line of credit or as a combination of these options. Untapped funds in a line of credit generally increase, allowing homeowners to borrow more money over time.

Government loan programs FHA loans An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans. FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans. Some of the other benefits of FHA financing: Only a 3 percent down payment is required. Closing costs can be financed. Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium. More flexible underwriting criteria than conventional loans FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage). Loans are assumable to qualified buyers. VA Loans VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans. Other benefits of a VA loan include: Negotiable interest rates. Closing costs are comparable and sometimes lower - than other financing types. No private mortgage insurance requirement. Right to prepay loan without penalties The Mortgage can be taken over (or assumed) by the buyer when a home is sold. Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan. Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount. A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA. Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.

Before deciding on what terms lenders will offer you on a loan (which they base on the "risk" to them), they want to know two things about you: your ability to pay back the loan, and your willingness to pay back the loan. For the first, they look at your income-to-debt obligation ratio. For your willingness to pay back the loan, they consult your credit score.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they're named after their inventor!). Your FICO score is between 350 (high risk) and 850 (low risk).

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. In fact, the fact they don't consider demographic factors is why they were invented in the first place. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed as a way to consider only what was relevant to somebody's willingness to repay a loan.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Different portions of your credit history are given different weights. Thirty-five percent of your FICO score is based on your specific payment history. Thirty percent is your current level of indebtedness. Fifteen percent each is the time your open credit has been in use (ten year old accounts are good, six month old ones aren't as good) and types of credit available to you (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards). Finally, five percent is pursuit of new credit -- credit scores requested.

Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.