Reverse For Purchase-An “Informed” Way of thinking about Your Retirement”

by Daniel J Turner-NMLS#1016716; Geneva Financial-LLC NMLS#42056

Copyright 2020 Daniel J Turner-All rights reserved.

Often, “retirement” means “change” (particularly) when it comes to the conversation of “where to live”…Whether it’s in a different home more suited to your new lifestyle in another neighborhood, or even another State or climate? The Home Equity Conversion Mortgage (HECM-HELOC) for Purchase opens the doors of wonderful opportunities both in your present days and for the rest of your lives! This plan allows seniors at least 62+ years of age to purchase a home using the HECM. This can be a valuable option for seniors who need a new home that better meets their physical needs, or who wish to move closer to family members.

Since this is a reverse mortgage product, any monthly payments made by the Borrower are voluntary. Building a line of credit is one reason a Retired couple would make voluntary payments. The equity line of credit in the FHA HECM HELOC is guaranteed to add new equity at the mortgage interest rate for (up to) the next 150 years from the birth of the youngest borrower! It can never be canceled, suspended, or reduced at any time. Payments on the HELOC are also voluntary, and result in an immediate reduction in the debt, and an immediate increase in the volumn of new equity added daily.

Unlike the traditional reverse mortgage, HECM for purchase loans require a down payment, which may be met with your own cash.  Typically the down payment required is based on the borrower’s age.  The older the borrower is, the lower the down payment requirement will be. HECM for purchases are subject to the same guidelines as a standard HECM loan.

Typically, A Borrower needs to (down-size) to a smaller, newer, safer, or modified home, and sells their home, then uses the FHA HECM HELOC to purchase this new(er) residence.

THE PROBLEM:

Since the 1934 “Federal Housing Act” (which founded the FHA), Borrowers have been compelled by a lac of product or plan (selection) into using the preferred 30 year mortgage program to finance the purchase of Residential Real Estate. I could give any number of you a clean sheet of paper and a pencil and you could diagram a better alternative to this common loan. The practiced repetition of using the same thing over and over again creates that insanity that compels an (otherwise intelligent 62+ yr old entering or in retirement) to repeat the same mistake even when obvious alternatives are now present.’

Sadly, we are so conditioned by history and habit that whenever “break through” products arrive, skepticism by value of comfort (The Devil we know vs. the Devil we don’t know) weigh far too heavily against our capacity for critical thought. In this day, there is now a CLEAR SEPARATION between using the 86 yr old model of property financing and the new programs dedicated and designed specifically to be used by Retiring people.

I will go as far as to even state that “If you’re attempting to purchase or refinance a current mortgage and your Loan Officer/Broker fails to mention and describe the benefits of the FHA HECM HELOC program? They should lose their license and be sued for professional malfeasance. I would suggest this could be applied to the financial advisor as well. We should all know better than to not recommend this outdated and dangerous (1934 era) program to any qualified Client in our chair. The FHA HECM HELOC is a superior choice.

WHAT ARE THE FHA HECM HELOC ADVANTAGES?

1. “Traditional” mortgages are FILLED with unnecessary risks for Seniors. Here’s some examples: *Portfolio failures can make it difficult or problematic to make ongoing mortgage payments. *Borrowers may simply forget to meet financial obligations. *Family members may need financial help which may cause missed payments and trigger foreclosure and wreck credit. *Seniors may simply desire to “have a year sabbatical” from making mortgage payments. *This standard 1934 model of mortgage (commonly used) available today is front-loaded, costly, and inefficient. Simply stated, 30 YEARS is 360 chances to default and enter foreclosure. This program has no mandatory payments.

2. Because there are no mandatory payments, the Borrower’s “Debt-to-Income” ratio falls to virtually ZERO. This means owning a great home, AND being able to enjoy other very nice retirement comforts that are more important. Like a nice(r) boat (my favorite!). Or, your favorite Country Club membership(s). Or, world travel. Or, a vacation home. Or, your “Legacy” ambitions. Think about that.

3. Using this plan means being able to save/invest your “mortgage payment” as a “principal” investment (instead of paying 75-80% of your payment into worthless mortgage interest) with your Retirement Planner and ultimately use the same payment to pay off your mortgage ENTIRELY in 7-12 years instead of 30. No extra payments. No double payments. No lump sum payments. This is a superior way to pay off a mortgage debt. EARN interest instead of PAYING interest!

4. There are MANY protections in this plan provided to the Borrowers that are impossible to find in any other loan program (including VA)! These benefits add to the value of a HECM HELOC to provide future benefits and values for the lives of the Senior Retiree. Among these benefits? Non-recourse debt. Multiple ways to use the equity in the future as well as today. Traditional IRA to Roth IRA Conversions. Interest rate arbitrage. Use equity to purchase rental properties under better terms for higher monthly income and equity growth. The list is as long as your creative capacities as the cure to virtually any retirement question is simply capital and/or cash flow, and your Plan provides you with BOTH.

5. We won’t always be healthy. If a retiree requires extended long term care ? The investment portfolios may be liquidated and paid onto the reverse debt (DO NOT PAY OFF THE MORTGAGE-just simply PAY IT DOWN) and ALL of it becomes part of the growing line of credit and adds new equity at the mortgage rate. This means you may qualify for Medicaid immediately instead of after “going broke”. When that Spouse passes on, or recovers, and comes back home to live? The Line of Credit sum may be used to help cover home health agency costs and/or repatriated back into investments, and allows them to continue where they left off!

6. The FHA HECM HELOC allows you to turn your home into a “fail-safe” Bank, and you have the rights to use your bank any way you want for the rest of your time living there! (residency is a rule).

Using the FHA HECM HELOC to acquire your retirement estate is the smarter way to live. Call me today!~808-464-5292 or, email me directly: dturner@genevafi.com

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