Ryan Kleis and Robert Ross, founders of Reverse Mortgage Educators, Inc., have been helping clients stay in their homes and/or purchase new houses with the Federal Housing Administration (FHA) Insured Reverse Mortgage for the past ten years. Recently, Ryan and Robert had the pleasure of meeting former Major League Baseball player, 1974 National League MVP, and 4 consecutive Gold Glove winner, Steve Garvey. After spending time learning about Reverse Mortgage Educators and the benefits of their product, he signed on as a spokesperson. During their time together, Steve had a few great questions about Reverse Mortgages:
Steve Garvey asked, “Recently there has been a lot of news and advertisements about Reverse Mortgages, so can you explain how a homeowner can get a Reverse Mortgage on a home and not have to make any monthly mortgage payments?”
Kleis explained, “Steve, when someone has a traditional mortgage, a statement arrives every month and the homeowner is required to send in the amount due. However, if they had a Reverse Mortgage, the homeowner is not required to send in a monthly mortgage payment when the statement is received. Instead, the interest and mortgage insurance for that month is simply added to the balance. Regardless of their mortgage balance, the homeowner stays in their home for their entire life without making a monthly mortgage payment.” To request a no-obligation DVD informational kit, click here.
Steve replied, “That sounds good. However, if the homeowner wanted to make a monthly mortgage payment, could they?”
Ryan emphasized, “I am glad you asked. Here is the way it works. While the best part about a Reverse Mortgage is that the homeowner can live in their home without making a monthly mortgage payment, ultimately the payments are optional. Some clients do choose to send in payments to control their balance and preserve equity, but rest assured, making monthly mortgage payments are completely at the homeowner’s discretion and not the bank’s. Also, whether the homeowner makes monthly mortgage payments or not, they or their trust remain on title as the owner and a Reverse Mortgage is simply a lien against the home.” For an INSTANT quote on how much you may qualify for, click HERE!
Garvey further inquired, “Okay. Let us say they lived in their home for the rest of their life and then they pass away. How do the heirs get control of the property? What will happen to the home and the equity?”
Ross responds, “Here is where many people are misinformed. First, we need to understand that there are no prepayment penalties or rules on how long the borrowers need to keep the Reverse Mortgage. Therefore, if the borrowers want to sell or refinance their home during their lifetime, they are free to do so. Now, let us say the homeowner has lived out their life and now the home with the Reverse Mortgage is going to the heirs. The heirs have options depending on the value of the house and how much is owed. If the heirs want to keep the home and the equity, they simply pay off the balance owed. If they do not want to keep the home, they can sell the house, pay off the Reverse Mortgage, and keep the remaining equity.” For an INSTANT quote on how much you may qualify for, click HERE!
Garvey further explores, “That sounds great! But what if the house is underwater?”
Robert elaborates, “There is a feature only the FHA Home Equity Conversion Mortgage (HECM) Reverse Mortgage has: it is called the 95% rule. Let us say the homeowner passed away during a down real estate market and the home is now underwater, like the 2007-2009 housing crash. This is where the 95% rule applies. The heirs are given an option to keep the property by only paying off the Reverse Mortgage at 95% of the current market value of the house. Here is an example. A home is worth $500,000 and the Reverse Mortgage balance is $525,000. Instead of paying the full balance of $525,000, the heirs pay $475,000, which is 95% of the appraised market value. It is a great benefit that allows the heirs to step into equity right away, even though their parents enjoyed their home without making monthly mortgage payments. For an INSTANT quote on how much you may qualify for, click HERE!
If the heirs decide to not utilize the 95% rule, the final option is to walk away from the home, and that will result in the home being foreclosed on. The borrower, estate or heirs are not responsible for paying it back. The home will be sold and the remaining loss will be paid by FHA. The bank cannot come after the family for the difference. This is how the Reverse Mortgage is truly ‘non-recourse’.” To request a no-obligation DVD informational kit, click here.
Steve Garvey continues, “I have heard many opinions on the Reverse Mortgage, both good and bad. Ryan and Robert, could you validate or dispel some of these potential myths?”
Robert responds, “Sure, Steve. Here are some of the most common statements from potential borrowers:
- The bank will own a home with a Reverse Mortgage. Absolutely not! The Reverse Mortgage is simply a lien against the homeowner’s property much like a traditional mortgage. The title belongs to the homeowner and will belong to them until their passing, in which will be passed on to the heirs. The heirs have twelve months to decide if they want to keep the house and pay off the Reverse Mortgage, or sell the home and keep the equity after the Reverse Mortgage has been paid off.
- Reverse mortgages are prohibitively costly. This is a blanket statement and only true under certain conditions. A good scenario to use as a costly example might be if a homeowner took out a Reverse Mortgage but sold the home within the first three years. Under this circumstance, the Reverse Mortgage costs may be too high. Reverse Mortgage Educators does not advise homeowners to take out Reverse Mortgages if they do not plan on living in their home long term.
- The heirs will owe the bank. This is false. Reverse Mortgages are known as “non-recourse” mortgages. This means that if the house is underwater, the borrower, estate or heirs are not responsible for paying it back. The home will be sold and the remaining loss will be paid by FHA. The bank cannot come after the family for the difference.
- My home must be owned free & clear to get a Reverse Mortgage. Not at all. In fact, most homeowners obtain the Reverse Mortgage specifically to rid themselves of the burden of that monthly mortgage payment.
- Income from a Reverse Mortgage is taxable. It is not taxable and it does not affect Social Security and Medicare.
- Homeowners must have good income and credit to qualify. Not at all. There are limited income and no FICO score qualifications and only certain types of credit problems can affect the Reverse Mortgage: foreclosed FHA mortgages, defaulted federal student loans, and unpaid federal tax liens.
- Reverse Mortgages are just for the cash poor. No. Affluent people are taking advantage of the Reverse Mortgage as well. A Reverse Mortgage can serve as an excellent financial planning tool. This may be why homes with values over $750,000 are a growing segment in the Reverse Mortgage industry.
These myths are gradually being dispelled and Reverse Mortgage numbers are rising rapidly. For an INSTANT quote on how much you may qualify for, click HERE!
Steve Garvey inquires, “One more thing, Ryan and Robert. I have seen information put out there that seem to indicate that a homeowner with a Reverse Mortgage could be foreclosed on. How does this happen?”
Robert answers, “Well Steve, there are rules that need to be followed for a homeowner to remain in the home even if they have a Reverse Mortgage. The first rule is that the homeowner needs to keep up their property taxes, homeowner’s insurance and any Homeowner’s Association (HOA) dues that are applicable. The second rule is that they need to keep the home as their primary residence. Finally, they need to maintain the home to FHA standards. A list of those standards is available from FHA. So, if someone heard of a borrower getting foreclosed on, then it is possible that one of these rules might have been broken. To request a no-obligation DVD informational kit, click here.
Steve Garvey concludes, “Ryan and Robert, I am really impressed with how Reverse Mortgage Educators cares about the best interest of their clients. I’d like to encourage people who believe that a Reverse Mortgage might be right for them to click here to request your free educational package which also includes a DVD. It really answers most questions a person might have, and tell them, Steve Garvey sent you!
**BONUS** If you close a loan with Reverse Mortgage Educators, you will also receive an AUTHENTIC Autographed Steve Garvey Baseball!
Now that a million homeowners have taken advantage of a Reverse Mortgage we want to help other homeowners learn more about it. We have a complimentary comprehensive brochure and DVD that will go over what we covered in this article and more. Topics such as “The Entire Process – How a Reverse Mortgage Works”, and “Line of Credit vs. Traditional Home Equity Line of Credit” can be answered by our free package and friendly staff. For more information, we can also be reached at Ryan@ReverseMortgageEducators.com or Robert@ReversMortgageEducators.com.
We want to give a special thanks to Steve Garvey for his great questions and to everyone else who has taken the time to read this blog article to learn more about this powerful tool.
Steve Garvey Reveals How to Hit a Grand Slam with a Reverse Mortgage