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JEMORTGAGE
338 Posts |
 Posted - 10/13/2008 : 07:50:08 AM
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| im new to reverse mortgages and have a couple of questions whats max ptv on this? how does it work?? thanx |
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fundid
161 Posts |
Posted - 10/13/2008 : 07:57:00 AM
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quote:
Originally posted by JEMORTGAGE
im new to reverse mortgages and have a couple of questions whats max ptv on this? how does it work?? thanx
Not sure what you mean by ptv? With reverse mortgages the older you are above 62 yrs of age the more ltv you qualify for. Some can be around 50% ltv or so and some 60-90% or so. I always use a reverse mortgage calculator to figure this out.
When you say how does it work are you speaking of the reverse mortgage in general? Please clarify.
thanks,
Anthony |
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JEMORTGAGE
338 Posts |
Posted - 10/13/2008 : 07:59:01 AM
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| soory, i meant ltv...yes how do they work in general..how is ltv calculated? do you need income docs? might be a dumb question but just wanted to know |
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rainmand
3805 Posts |
Posted - 10/13/2008 : 08:41:26 AM
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I've originated a lot of Reverse Mortgages and have never been accurate at guessing what the SPF number is going to be. I always have to use a Reverse Mortgage Calculator.
A loan to value ratio (LTV) can't be generated with a Reverse Mortgage due to the differences in variables used to calculate the benefits. Instead, a Shared Premium Factor (SPF) is used and that number tells us how much equity can be converted to cash (the "Principle Limit"). However, once you receive the SPF number you can relate it to LTV.
No two households can generate the same SPF number because the variables are unique for everybody ... value of the home, location and birthdates (assuming I'm using the same Index and Margin for them).
Reverse Mortgages for Dummies is your best place to start learning the basics. Then get a mentor thats done more then a couple of them. |
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JEMORTGAGE
338 Posts |
Posted - 10/13/2008 : 08:47:07 AM
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| thanx, what are the main lenders for this type of mortgage? |
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fundid
161 Posts |
Posted - 10/13/2008 : 08:49:05 AM
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quote:
Originally posted by JEMORTGAGE
soory, i meant ltv...yes how do they work in general..how is ltv calculated? do you need income docs? might be a dumb question but just wanted to know
The homeowners age, value of home, and interest rates factor into how much they will qualify for.
A reverse mortgage has no income or credit requirements. Some judgements must be paid off depending on the state your client is in. All mortgages must be paid off.
The homeowner remains on title, just like a traditional loan.
The homeowner can make payments of any amount. Interest only or more. But there are never payments required. I have some clients who pay the interest only to keep there balance the same over time. But most choose to not make payments and in that case interest on the loan will accumulate for as long as they have the loan on the amount they have borrowed.
The homeowner can take the money in a full lump sum, partial lump sum, monthly payments, or line of credit or a combination of partial lump sum and line of credit. The reverse mortgage line of credit is the favorite of most people.
There are fixed rates available for reverse mortgages in most states. They are fixed for the life of the loan. Some lenders do not offer them most do. Fixed reverse mortgages require the homeowner take out the full lump sum they have available. So interest accrues on the full lump sum from day one which can make the overall interest charges higher in the long run.
The line of credit in my opinion is the best option in most cases if they don't need all the money upfront. The reverse mortgage line of credit has a growth rate of .5% higher than the interest rate on the reverse mortgage so overtime the creditline grows giving the homeowner access to more of their equity. There are treasury and libor products available for the monthly programs. They could leave all the money in the line of credit and would not accrue interest on the creditline till they pull money out and only on the amount being pulled out. This is a great option for those who say they don't need it or for those who would like to draw a few hundred dollars a month to supplement income.
The loan must be paid back when the homeowner sells there property or when they pass away. The reverse mortgage must be the homeowners primary residence as well. When they pass away the heirs have 6 months to determine if they want to sell or refinance the home. Additional 6 months extensions are given on case by case basis.
The amount borrowed plus interest is what is paid back. Any remaining credit line remains in the home as equity assuming home values are not lower than the line of credit. Any remaining equity is passed on to the heirs of the home.
Reverse mortgage counseling is required on reverse mortgages prior to processing the file.
This is the quick version of how a reverse mortgage works, I am sure I left a few things out that the someone else will touch base on.
Feel free to contact me with any more questions
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fundid
161 Posts |
Posted - 10/13/2008 : 08:53:36 AM
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quote:
Originally posted by JEMORTGAGE
thanx, what are the main lenders for this type of mortgage?
Sunwest Mortgage
JB Nutter
Financial Freedom
There are more but these are the guys I use.
Feel free to email me for ae information. |
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