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REVERSE MORTGAGES Presented by PAUL BANGART Artisan Mortgage. Who is Artisan Mortgage? We believe in CUSTOMERS FIRST We see our function to our customers is to simplify complicated financial decisions and take the time to make sure our customers understand their options.
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Financial Freedom Senior Funding Corporation administers a "jumbo" proprietary reverse mortgage product called Cash Account to benefit homeowners living in higher-priced homes valued above the FHA and Fannie Mae lending limits. In addition to Financial Freedom, the program is offered by most reverse mortgage lenders.
Homeowner learns about the reverse mortgage program from a news article, advertisement, word-of mouth, seminar, etc.
If necessary, homeowner seeks additional information.
Homeowner seeks counseling. Counseling is mandatory regardless of which reverse mortgage product you choose. Counseling is conducted face-to-face or by phone. The counselor provides supplemental information on reverse mortgages, determines whether you\'re eligible to get a reverse mortgage, and discusses other options that may be available to assist with your daily living. The homeowner will be given a certificate to give to the lender as proof they were counseled.
4. APPLICATION / DISCLOSURE
Homeowner fills out loan application and selects payment option: fixed monthly payments, lump sum payment, line of credit, or a combination of these. Lender discloses to homeowner the estimated total cost of the loan, as required by the federal Truth in Lending Act. Lender collects money for home appraisal. Homeowner provides lender with required information, including photo ID, verification of Social Security number, copy of deed to home, information on any existing mortgage(s) on property, and counseling certificate
Lender orders appraisal, title work, lien payoffs, etc. An appraiser comes to your home to assign a value to the home and determine the physical condition of the property. If the appraiser uncovers structural defects that require repair, the homeowner must hire a contractor to complete the repairs after the reverse mortgage closes
After receiving all pertinent information and data, the lender finalizes loan parameters with homeowner (i.e. payment option, frequency of loan interest rate adjustments) and submits loan package to underwriting for final approval. Remember, each loan is unique and it takes time to complete the underwriting of a loan package.
When the loan package is approved, closing (signing) of loan is scheduled. Interest rates are calculated. Closing papers and final figures are prepared. Closing costs are normally financed as part of the loan. Lender or title company has homeowner sign loan papers.
As you can see, Reverse Mortgages can be expensive.
Consider a Reverse Mortgage as a long-term commitment. Average length is between 11 and 12 years to pay-off. This allows amortization of front-end costs.
Reverse mortgage lenders, with approval from the U.S. Department of Housing and Urban Development, have implemented a new consumer protection called the "principal limit lock" which freezes the “expected interest rate” on federally-insured Home Equity Conversion Mortgage (HECM) reverse mortgages for a period up to 60 days from the date of application. The expected interest rate is utilized to calculate the amount of funds available from a HECM reverse mortgage.