Real Estate Professionals Serving the Baby Boomers

Couple happy house 4

Can a Reverse Mortgage get you more listings and more sales?

A Guide for Real Estate Professionals

Yes, it can, and here’s how …
  • Use as a tool to get listings from Baby Boomers
  • Use as a tool to get sales you thought were impossible
  • Help clients get a home and build cash for later
  • Help clients downsize and get the home they really want
  • Use the “Aging In Place” trend to your advantage

Most Realtors® don’t like reverse mortgages because they think if someone gets a one, that’s it. The Realtor® will never get that listing. At least, not till the owner dies, then maybe the kids will use them. You are right! Folks with reverse mortgages are not your clients. Don’t call on them. However …

If you know how to use the HECM Reverse Mortgage for Purchase you can add at least two or three listings and sales per year that you would not otherwise get.

 

First, Look at the 62+ Market

This market is important to real estate professionals because over half plan to move.

Senior Couple Walking Along Beach TogetherApproximately 57% of Baby Boomers, adults ages 49 to 67, say they plan to move out of their current homes during their retirement years, according to a recent survey from Better Homes and Gardens Real Estate. And of the ones who want to move, over half, 58%, want a home the same size or larger (Demand Institute study)

10,000 folks will turn 62 each day for the next 19 years

With approximately 77 million Boomers in the U.S. and 10,000 being added to the 62+ market each day (Pew Research), it’s quite significant for our real estate industry. Contrary to past trends, most of the Boomers are entering their retirement years with mortgage debt. That number has increased over 140% in the last 20 years (Demand Institute study). The vast majority of this population wants to find a home where they can Age In Place comfortably, and the majority of them plan on making a move. If you are in real estate sales, you will be dealing with this market for a long time to come. You better be prepared to work with them and satisfy their needs.

Whether it’s to up-size, downsize, relocate to a different city or state, a reverse mortgage for purchase is a valuable option:

  • for the mainstream retiree who needs to conserve cash for their retirement needs.
  • for the senior buyer who has difficulty qualifying for a loan.
  • for the buyer who has limited cash, but wants more home than the cash alone will buy.

Next, Look at the Loan

The Reverse Mortgage for Home Purchase Program:

Financial tool 1For homes priced #625,500 and below, your client brings in a substantial down payment based on their age — varying between , 48% at age 62 and 25% at age 90+, and the balance is financed with a HECM reverse mortgage loan. For homes priced over $625,5000, the HECM Reverse mortgage will finance between $327,000 and $469,000 depending on the buyers age. Your buyers will have no required monthly loan payments as long as they live in the home. All they have is the taxes, insurance, HOA if any, and maintenance, as with any other loan.

For an explanation and down payment vs. purchase price examples see the blue charts in the HECM Loan for Purchase web page.

There is no prepayment penalty. They can sell and move or pay down the mortgage whenever they want.

To qualify your buyer must be 62 years of age or older, not be delinquent on any federal debt, and have financial resources to continue to make timely payments of ongoing property charges such as property taxes, insurance and homeowner association fees, as with any mortgage.

There is a unique feature of the HECM Reverse mortgage that allows your clients to build access to cash for later in retirement if they choose to use it. Click here

Unique feature of HECM Loan: You are not required to make payments, but if you do any amount you pay into the reverse mortgage with a Line of Credit, first goes to pay off the interest, then reduces the principal, AND the full amount of your payment is ALSO credited to the Line of Credit. That means that you can get that money (and more) back out of the loan any time you want it. Here is why you can get more back than you put in. HUD requires the lender to increase the amount of the HECM Line of Credit by a rate of 1.25% more than the interest rate of the loan, compounded monthly. That means that you can build access to more cash later in retirement.

See an example of using the Unique Feature Line of Credit in Strategy #4 on this web page.

Are Reverse Mortgages really more expensive? You may be surprised, but a HECM Reverse Mortgage may have the same Annual Percentage Rate (APR) as conventional mortgages. For an explanation and example click here.

See and download more detailed Purchase Contract Requirements by clicking here.

 

And Now, How to Get Listings and Sales using the Loan

RAH_Coffee_BreakThe goal in all the following strategies is to get the clients into a comfortable and sustainable home that they can be assured to have for the rest of their lives.

My personal recommendation for folks interested in Aging in Place is to purchase a Single Family Residence. Because condominiums have HOA dues and assessments for repairs, lawsuits, etc., homeowners have no real control over their future monthly expenses. Often a project encounters very large unexpected expenses, which can greatly increase the monthly HOA payment. Adding into a budget for a SFR amounts for maintenance, insurance, and taxes often totals less than HOA dues and other HOA assessments. Living in a SFR gives homeowners more control over their expenses.

RE Strategy #1. All cash buyers who just can’t find something they like for what they can afford – These clients just sold their house or got an inheritance, etc. and either can’t afford to make loan payments or can’t qualify. You show them homes that they could buy, but they always want something better. For example, they have $200,000 to use for a purchase, but in the area where they want to live the homes range from $390,000 to $500,000, so you can’t get a sale. Or you have clients that you show $500,000 homes that they could buy with their cash, but they are only satisfied with $700,000+ homes. Or, other clients may have $700,000 cash to use, and after you show them everything on the market that they could buy, they keep going back to the $1,000,000 home that they love.  Often they just stop calling you one day and you never see them again.

You can get the sales and make all of these clients happy by suggesting that they explore using a HECM Reverse Mortgage to finance the balance and get the home that they want. The qualifications are minimal, and there are no required monthly payments, so it does not impact their cash flow.  For an example, see Strategy #1 in the HECM Loan for Purchase page.

 

RE Strategy #2. Homeowners who can’t net enough cash out of sale to move. – You meet 62+ homeowners who say, “I would move to more suitable home, but if I sold this I wouldn’t get enough cash out to buy what I want.” They don’t want to, or cant, qualify for a conventional mortgage loan. They are just going to stay where they are till something happens. Most real estate professionals just go on to the next home, never calling on that person again.

You can get their listing and have a happy client by showing them homes that they could afford using a HECM Loan for Purchase. This is similar to #1 except that you may or may not get their purchase transaction. They may want to move to another state or area, possibly closer to their kids or for retirement. However, often you are able to get their purchase too. For an example, see Strategy #1 in the HECM Loan for Purchase page.

 

building-blocks 2RE Strategy #3. Homeowner needs more in retirement account to move. – In this case you have homeowners who would like to move, but if they did, they wouldn’t have enough income from their retirement income from their investments. So they just stay where they are and hope that the economy and market will increase enough for them to be in a better financial position later. Most real estate professionals would just keep in touch and hope that someday they would get a listing.

However, you can get their listing and have a happy client by showing these homeowners how they can increase their retirement income investments AND get a new, more suitable home for their retirement by using the HECM Reverse Mortgage for Purchase. You list and sell their home. Then they purchase their new home using only part of the money from their sale for the down payment, and they finance the balance with a HECM Reverse Mortgage. This allows them to put the remainder of their cash from the sale into their retirement accounts, and thereby increasing the monthly retirement income. You get the listing and, unless they are moving far away, you should get the purchase too. For an example, See Strategy #2 in the HECM Loan for Purchase page.

RE Strategy #4. Added benefit of purchasing a home AND building cash for later use. – Here you have buyers who are 62+, possibly still working, with a substantial down payment, and they can qualify for a conventional loan. These buyers have enough income to make monthly loan payments. In talking with them, you find that they are looking for a home where they can Age in Place comfortably. Normally you would try to stay in contact with them and show them homes till they found one they like and close the sale. That makes you just like every other real estate sales person. Often you find that buyers like these end up buying from an open house, an internet inquiry, or from some other Realtor® they met. Your chance losing the sale is great.

numberoneblankYou can distinguish yourself from other Realtors® by helping them meet future financial needs while getting them into a great home when you share with them the Unique Feature of a HECM Reverse Mortgage for Purchase – the growth of the Line of Credit. If you deal with senior buyers, you know that 75% of them will have expenses for Home Care and/or accessibility remodeling, and of course more medical expenses in their futures. Where is the money going to come from for these expenses? Everyone is worried about outliving their money. You can help them be prepared for these future costs while they make their loan payments. This puts you a cut above the other Realtors®, and you will have a devoted client who is eager to refer you.

For example, let’s say they purchased a $700,000 home, financed $300,000 with the HECM reverse mortgage, and made the same monthly payment that they would with conventional loan, $1,475 per month. Here’s what would happen in 15 years:

LoC plus Puechase examples 20150304 2

 Access to more money than you borrowed. The chart shows that the monthly payment of $1,475 was credited to both the loan AND the Line of Credit. Over 15 years the payment reduced the loan balance to $208,000 while the Line of Credit increased to $370,000. That increase is due to compounding interest of the growth rate that is applied to your Line of Credit balance each month. You can see from the chart that in 15 years they could actually get back more cash than they originally borrowed by using this strategy. This example is from Strategy #3 in the HECM Loan of Purchase web page.

Cartoon mortgage-payments-weighing-you-down smallRE Strategy #5. Homeowner struggling to make loan payments. – The majority of Boomers are entering their retirement years with mortgage debt (Demand Institute study). If they are still working or living on retirement income, the loan payment takes a big chunk out of their Cash Flow each month. You will find Homeowners 62+ who are struggling to make their monthly loan payment along with all their other expenses. Often the money they would get from selling, after paying their loan and sales expenses, is not enough to purchase another home. Some just stay where they are and struggle with the expenses. Others have to sell, and then they rent till their money runs out. It’s a bad situation for them and in most cases, no listing or sale for you.

You can help them out of a bad situation, get the listing, and have happy clients by showing them the use of the HECM Reverse Mortgage for Purchase. This situation is similar to #1 above in that the homeowners would not come out of their sale with enough money for another home suitable to them. Here we have the added pressure of the monthly mortgage payments on their current home to make the situation more urgent. You will be able to find them a suitable home using the money from the sale of their current home as the down payment and financing the remainder with the HECM Reverse Mortgage. You get a listing and a sale. But most of all, you have happy clients who have a home where they can live for the rest of their lives without the burden of a monthly mortgage payment. For an example, see Strategy #4 in the HECM Loan for Purchase web page.

 

 And Finally, Let’s Look at the Lender & Loan Officer
Our Company, All Reverse Mortgage vs. the others

all-rev-logo redone by chas thickenedIt may surprise you but those “celebrities” you see all over TV have some of the worst independent consumer ratings in the industry. Compare All Reverse Mortgage and you will see the crystal clear difference, from customer service to loan terms we never compromise. Follow these links to see our ratings:

Top A+ Rating By The Better Business Bureau
Trustlink Independent Reviews 5 out of 5 Stars
eKomi Independent Reviews 4.9 out of 5 Stars

See Customer Testimonials

All Reveres Mortgage isn’t the largest, and we don’t have Old Actors on TV trying to convince gullible people to call phone sales people and get sold some form of a reverse mortgage. We are a strong, well funded mortgage banking company with solid, experienced professionals who work with financial planners, Realtors®, CPAs, attorneys, and homeowners in planning and funding the HECM Reverse Mortgages that best suit the client’s needs. We are based in California, with some of the strictest oversight and the most stringent mortgage rules in the country.

Your Loan Officer, Charles Guinn

Blue Pin, 3/5/02, 5:49 PM, 8C, 1122x1416 (1806+134), 100%, bent 5 stops, 1/100 s, R72.2, G66.2, B79.7charles AllRMC copyI work with Realtors® and others in arranging the financing with the HECM reverse mortgage. The use of HECM for purchase is not widely known to many Realtors® and therefore it is important we get in contact to review the exact requirements for the purchase agreement (See the HECM Loan for Purchase Contract Requirements). The requirements are easily met if they are addressed prior to completing the purchase contrast. I have a Real Estate Broker License with CA DRE (#00517405) and years of experience, however I do not list or sell properties. I use my training and experience to offer assistance to you in structuring the sale so that your client gets the deal they want in a form that will fit the HECM loan requirements.

Let’s Work Together!

Call me today – (310) 616-6965 or complete the form at the tab on the right and let’s schedule a time to talk more about how this financial tool can help you get more listings and sales.

I am available to help educate you, and your sales team, about using the HECM Reverse Mortgage to increase your business.

You can download this material by clicking the Illustrations below.

RE Pros Baby Boomer

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