Serving Up Knowledge
- 1. UNLOCKING A COMMONLY MISUNDERSTOOD AND UNDERUTILIZED ASSET SERVING UP KNOWLEDGE Cástulo Romero Reverse Mortgage Area Manager NMLS# 582981 Office: (800)951-2087 Mobile: (818)300-5125 cromero@onetrusthomeloans.com
- 2. Overview • Meet the Presenter • My Story • A Definition • My Hypothesis • Quantify X • Elements of X • Making Great X • Comparing X to Y • History of X • Trends in X • Key Takeaways • Tips for X • Call to Action AGENDA ♦ Current Events & Impact ♦ RETIREMENT CONCERNS ♦ Home Equity as Liquidity ♦ Strategic Uses of HECM ♦ Schedule a free personal consultation 2
- 3. WORLD EVENTS & IMPACT 3 INCREASE ON COST OF GOODS (CNN BUSINESS) 12% Eggs, affected by the deadly avian flu, 49.1% more expensive Flour prices jumped 24.9%, bread went up 15.7%, milk was 14.7% more expensive and coffee prices rose 14.6%. Chicken was up 12% and fruits and vegetables spiked 9.7%. 2009 2019 MTD Eggs $1.71 dozen $1.41 dozen $7 dozen Bacon $3.45 pound $5.51 pound $7.61 pound Bread $1.37 pound $1.37 pound $2.70 pound Milk $3.03 gallon $3.19 gallon $4.76 gallon Coffee $3.67 pound $4.20 pound $8.00 pound Chicke n $1.26 pound $1.43 pound $4.31 pound Gas $2.35 gallon $4.11 gallon $4.02 gallon
- 4. RETIREMENT CONCERNS 4 Longevity Ensuring families don’t run out of money Lifestyle Liquidity Access to liquid assets in the event of an unforeseen events Legacy Leaving something for individuals and causes that matter Additional cash flow to enjoy the most meaningful time of life
- 5. WAYS TO ACCESS HOME EQUITY Cash Out Refinance Home Equity Line of Credit Reverse Mortgage Sell your home 5 The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid. This is not tax advice. Consult a tax professional. These materials are not from HUD or FHA and were not approved by HUD or a government agency. This is an Advertisement. All products are not available in all states. All options are not available on all programs. All programs are subject to borrower and property qualifications. Rates, terms and conditions are subject to change without notice. For more information on Reverse Mortgages, visit: https://onetrusthomeloans.com/reverse-mortgage-disclosures/
- 6. Internal use only, confidential & proprietary. 6 HOME EQUITY CONVERSION MORTGAGE (HECM) 6 FHA insured non-recourse loan on a primary residence for borrowers age 62 or above (Non-FHA available at age 55+in some states) Loan becomes due when last borrower passes or is out of the home for 12 consecutive months. Loan proceeds are not taxable and available line of credit can grow over time Homeowner continues to occupy the home as primary residence and remains on title as owner Eliminate monthly payments, and access home equity in multiple ways with payments made to you (monthly, lump-sub, combination) Required to pay property taxes, HOl, and HOA payments, and maintain property condition 6
- 7. REFINANCE WITH HECM TO INCREASE CASH FLOW 7 Connie Smith (Age 69) Home Value $250,000 Mortgage Owed $52,640 Annual Income Needed $40,000 Social Security Income $3,000/mo. Connie has felt the effects of high inflation over the past year and would like some additional breathing room in her tight cash flow. She also realized the uncertainties today and would feel more comfortable if she had a larger safety net.
- 8. REFINANCE WITH HECM TO INCREASE CASH FLOW 8 Connie Smith (Age 69) How Connie increased her retirement security? Refinanced her existing mortgage using a HECM What did that do for her? Freed up $572/mo. in required P&I mortgage payments and Created an initial line of credit of $30,714 that increases…regardless of the home value The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid. This is not tax advice. Consult a tax professional. These materials are not from HUD or FHA and were not approved by HUD or a government agency. This is an Advertisement. All products are not available in all states. All options are not available on all programs. All programs are subject to borrower and property qualifications. Rates, terms and conditions are subject to change without notice. For more information on Reverse Mortgages, visit: https://onetrusthomeloans.com/reverse-mortgage-disclosures/
- 9. HECM SOLUTIONS 9 Taylor (70) and Gia (Age 65) Roberts Home Value $400,000 Let’s look at a few of the various ways they could expand their retirement strategy by integrating the wealth in their home.
- 10. HECM SOLUTIONS 10 Taylor (70) and Gia (Age 65) If Taylor and Gia had an existing Traditional mortgage, they could refinance with the HECM, creating flexibility and no longer have a mandatory P&I payment When Taylor, his advisor and his OneTrust Home Loans Mortgage Professional looked into how a HECM would work specifically, they determined that a HECM would produce approximately $125,000 in available Line of Credit They could delay the start of their social security payments and maximize their lifetime wealth impact They could start a Tenure payment – a monthly tax-free income that will continue as long as they live in the home and pay the property taxes, homeowner’s insurance, HOA fees (if applicable) They could have access to an additional asset – Line of Credit - that grows independent of the underlying home value (must still pay Property taxes, Homeowner’s Insurance, HOA fees, maintain home)
- 11. Strategic Uses of a Reverse Mortgage Asset Strategy Help retirement savings last longer Mortgage Payoff Paying off existing mortgage (requirement of the loan) Roth Conversion Use LOC to reduce or cover tax liability associated with a conversion Home Purchase Purchasing a retirement home that best fits their needs (right size, move closer to family) Home Repair Funding home repairs, modifications, or renovations Line of Credit Establish a LOC for unexpected expenses or opportunities Social Security Bridging social security deferral gap In-Home Care Fund or Supplement in-home care Gift Proceeds can be used for almost any reason, including inheritance STRATEGIC USES OF A REVERSE MORTGAGE FLEXIBILITY, CERTAINTY, EFFICIENCY 11 The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid. This is not tax advice. Consult a tax professional. These materials are not from HUD or FHA and were not approved by HUD or a government agency. This is an Advertisement. All products are not available in all states. All options are not available on all programs. All programs are subject to borrower and property qualifications. Rates, terms and conditions are subject to change without notice. For more information on Reverse Mortgages, visit: https://onetrusthomeloans.com/reverse-mortgage-disclosures/
- 12. 12 FUNDAMENTALS TO UNDERSTAND How much equity can I access? 01 Age 02 Interest Rates 03 Home Value How can I access the equity? 01 Tenure payment 02 Term Payment 03 Revolving LOC LOC – Line of credit 12
- 14. WHAT’S NEXT 14 The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid. This is not tax advice. Consult a tax professional. These materials are not from HUD or FHA and were not approved by HUD or a government agency. This is an Advertisement. All products are not available in all states. All options are not available on all programs. All programs are subject to borrower and property qualifications. Rates, terms and conditions are subject to change without notice. For more information on Reverse Mortgages, visit: https://onetrusthomeloans.com/reverse-mortgage-disclosures/ Cástulo Romero Reverse Mortgage Area Manager NMLS# 582981 Office: (800) 951-2087 Mobile: (818) 300-5125 cromero@onetrusthomeloans.com ♦ Use Home Equity to enrich your retirement ♦ Invited to educate and help the community on the uses of Home Equity ♦ Schedule a free 1 on 1 consultation with Jan (local Reverse Mortgage Professional)
- 15. 15 THANK YOU FOR ATTENDING
Editor's Notes
- #4: 1. “12% increase ....” https://www.cnn.com/2022/12/13/business/grocery-prices/index.html 2. Cost of goods 2009 to 2019 - https://www.businessinsider.com/grocery-price-change-bread-bacon-cost-10-years-ago-now-2019-12#sliced-bacon-1
- #6: There are many strategic uses of a Reverse mortgage, some of which are the following: An assets strategy - making retirement savings last longer by supplementing income from home equity vs. tapping into investments Paying off existing mortgage and having the option of no monthly mortgage payments Paying off medical bills, vehicle loans, credit cards or other high interest debts Purchasing a retirement home that best fits their needs. For example, rightsizing the home, moving closer to children or grandchildren, aging parents or siblings) Funding home repairs or renovations that are needed Establishing a HECM line of credit for unexpected expenses Bridging social security deferral gap Funding or supplementing in-home care Gift which can be used for almost any reason, but in most cases, it’s used to for gifting a living inheritance to heirs
- #8: Let’s dive in and discuss what is a Reverse Mortgage? A Reverse mortgage is a non-recourse home loan It allows homeowners to convert a portion of their home equity into liquidity There are various suite of products for homeowners to do a refinance or purchase a new home. The most populate reverse mortgage is the FHA Home Equity Conversion Mortgage also known as the HECM, which is for homeowners age 62 and older. There is also the Proprietary Reverse which allows homeowners 55 and older to take advantage of the reverse mortgage as a retirement solution. The reverse mortgage borrower can access this liquidity without selling the home, giving up title, or taking on a monthly mortgage payment. The loan balance plus the accrued interest does not have to be repaid to the lender until a immaturity event occurs. We’ll discuss the maturity event in the coming slides in more detail.
- #9: Let’s dive in and discuss what is a Reverse Mortgage? A Reverse mortgage is a non-recourse home loan It allows homeowners to convert a portion of their home equity into liquidity There are various suite of products for homeowners to do a refinance or purchase a new home. The most populate reverse mortgage is the FHA Home Equity Conversion Mortgage also known as the HECM, which is for homeowners age 62 and older. There is also the Proprietary Reverse which allows homeowners 55 and older to take advantage of the reverse mortgage as a retirement solution. The reverse mortgage borrower can access this liquidity without selling the home, giving up title, or taking on a monthly mortgage payment. The loan balance plus the accrued interest does not have to be repaid to the lender until a immaturity event occurs. We’ll discuss the maturity event in the coming slides in more detail.
- #10: Let’s dive in and discuss what is a Reverse Mortgage? A Reverse mortgage is a non-recourse home loan It allows homeowners to convert a portion of their home equity into liquidity There are various suite of products for homeowners to do a refinance or purchase a new home. The most populate reverse mortgage is the FHA Home Equity Conversion Mortgage also known as the HECM, which is for homeowners age 62 and older. There is also the Proprietary Reverse which allows homeowners 55 and older to take advantage of the reverse mortgage as a retirement solution. The reverse mortgage borrower can access this liquidity without selling the home, giving up title, or taking on a monthly mortgage payment. The loan balance plus the accrued interest does not have to be repaid to the lender until a immaturity event occurs. We’ll discuss the maturity event in the coming slides in more detail.
- #11: Let’s dive in and discuss what is a Reverse Mortgage? A Reverse mortgage is a non-recourse home loan It allows homeowners to convert a portion of their home equity into liquidity There are various suite of products for homeowners to do a refinance or purchase a new home. The most populate reverse mortgage is the FHA Home Equity Conversion Mortgage also known as the HECM, which is for homeowners age 62 and older. There is also the Proprietary Reverse which allows homeowners 55 and older to take advantage of the reverse mortgage as a retirement solution. The reverse mortgage borrower can access this liquidity without selling the home, giving up title, or taking on a monthly mortgage payment. The loan balance plus the accrued interest does not have to be repaid to the lender until a immaturity event occurs. We’ll discuss the maturity event in the coming slides in more detail.
- #12: There are many strategic uses of a Reverse mortgage, some of which are the following: An assets strategy - making retirement savings last longer by supplementing income from home equity vs. tapping into investments Paying off existing mortgage and having the option of no monthly mortgage payments Paying off medical bills, vehicle loans, credit cards or other high interest debts Purchasing a retirement home that best fits their needs. For example, rightsizing the home, moving closer to children or grandchildren, aging parents or siblings) Funding home repairs or renovations that are needed Establishing a HECM line of credit for unexpected expenses Bridging social security deferral gap Funding or supplementing in-home care Gift which can be used for almost any reason, but in most cases, it’s used to for gifting a living inheritance to heirs