r e v e a l i n g reverse Mortgages

Answers to common questions about the reverse mortgage process

Resolute Bank is proud to in-troduce you to a product geared toward seniors 62 and over—the reverse mortgage. As president of Resolute Bank, I am excited to offer this valuable financial tool to assist seniors with financial planning and cash flow needs.

Resolute Bank is a small commu-nity bank that prides itself on the relationships we develop with our clients. Our reverse mortgage staff builds a trusted advisory relation-ship with the client that is true to our community bank core values. We believe banking is first and foremost about people. We still believe it’s important to understand the needs of our clients rather than simply push a product.

The reverse mortgage team are an experienced group of advisors that strives to understand your needs. Once they understand your needs, they recommend a reverse mort-gage solution that works best for you. I hope you will find the com-munity bank spirit in your experience with the reverse mortgage team at Resolute Bank.

I am very proud of the Resolute team and the service they provide to the seniors whom they serve. We look forward to introducing you to the Resolute Bank reverse mortgage.

Kevin T. Rahe • President

how do i know if i’m eligible for a reverse mortgage, & how do i qualify?how much money can i get?what are my options for receiving money?how much does a reverse mortgage cost, & what are the upfront and closing fees?is an appraisal of my home rquired to get a reverse mortgage?do i need a lawyer to apply for a reverse mortgage?am i protected in any way by the federal government being involved? what kinds of rules apply to all FHA-insured reverse mortgages?am i required to receive counseling before i get a reverse mortgage?are the funds from a reverse mortgageconsidered taxable income?can funds from a reverse mortgage affect my social security or government benefits?

the financial requirements of the reverse mortgage program:

who has the title to my home when i have a reverse mortgage?am i required to pay anything to the lender during the course of the reverse mortgage loan?are there any limits on how i can use the funds from a reverse mortgage?how are interest charges on a reverse mortgage determined?

how much will be owed when my reverse mortgage comes due?what happens if i move out of my house after i get a reverse mortgage?what happens when my house gets passed to my heirs?

How do I know if I’m eligible for a reverse mortgage, and how do I qualify? . . . . . . . . . . . How much money can I get? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .What are my options for receiving money? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How much does a reverse mortage cost, and what are the upfront and closing fees? . . . .Is an appraisal of my home required to get a reverse mortgage? . . . . . . . . . . . . . . . . . . Do I need a lawyer to apply for a reverse mortgage? . . . . . . . . . . . . . . . . . . . . . . . . . . . . Am I protected in any way by the federal government being involved? . . . . . . . . . . . . . . What kinds of rules apply to all FHA-insured reverse mortgages? . . . . . . . . . . . . . . . . . . . .Am I required to receive counseling before I get a reverse mortgage? . . . . . . . . . . . . . . . . Are the funds from a reverse mortgage considered taxable income? . . . . . . . . . . . . . . . . Can funds from a reverse mortgage affect my Social Security or government benefits? . .

Financial requirements of the reverse mortgage program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

After getting a reverse mortgage:Who has the title to my home when I have a reverse mortgage? . . . . . . . . . . . . . . . . . . Am I required to pay anything to the lender during my reverse mortgage loan? . . . . . . . .Are there any limits on how I can use the funds from a reverse mortgage? . . . . . . . . . . . How are interest charges on a reverse mortgage determined? . . . . . . . . . . . . . . . . . . . . .

Repayment of the reverse mortgage:How much will be owed when my reverse mortgage comes due? . . . . . . . . . . . . . . . . . . What happens if I move out of my house after I get a reverse mortgage? . . . . . . . . . . . . What happens when my house gets passed to my heirs? . . . . . . . . . . . . . . . . . . . . . . . .

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how do i know if i’m eligible for a reverse mortgage, & how do i qualify?To qualify for a reverse mortgage, you must:

▪ be at least 62 years of age

▪ own a single family home; own a 2–4 unit home with one unit occupied by the borrower; own a HUD-approved condominium project; or a manufactured home that meets FHA requirements

▪ meet the financial requirements of the reverse mortgage program

how much money can i get?This depends on your age, the value of your home, the amount you currently owe on your mortgage (if applicable), and interest rates at the time of origination. Other factors include the type of reverse mortgage product and particular payment option you select. Your loan officer can calculate how much money you are eligible to receive, as well as finding out which particular payment option works best for you.

1 Consult your tax advisor regarding your particular situation.2 Payments for taxes, insurance and upkeep of the home are still required.

A reverse mortgage is a loan that enables homeowners above the age of 62 to convert part of the equity in their homes into tax-free money1 without having to sell the home, give up title, or take on a new monthly mortgage payment 2.

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what are my options for receiving money?

how much does a reverse mortgage cost,& what are the upfront and closing fees?Reverse mortgages usually have many of the same costs associated with a regular mortgage. Costs include an origination fee, mortgage insurance premium (for FHA Home Equity Conversion Mortgages), an appraisal fee, and certain other standard closing costs. In most cases, these fees and costs are capped and may be financed as part of the reverse mortgage, so that you incur minimal out-of-pocket expenses.

Depending on the type of loan you select, you may decide how to receive the money generated by a reverse mortgage.

▪ An upfront lump sum

▪ Fixed monthly payments for as long as you remain in your home (or for a pre- determined shorter period)

▪ A combination of monthly payments and line of credit

Note: fixed interest rate products do not have any payment option available other than lump sum.

The reverse mortgage is an excellent financial planning tool used by homeowners from all walks of life to enhance their retirement years. The growing popularity of this product is evidence of its benefit in a wide array of financial circumstances.

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is an appraisal of my home required to get a reverse mortgage?

Yes, an appraisal is required. The value of your home is a factor that determines how much you can get from a reverse mortgage. By law, a certified appraisal management company hired by the lender must order the appraisal.

do i need a lawyer to apply for a reverse mortgage?

Legal counsel is not required. However, Resolute Bank encourages you to seek the advice of a legal, tax, or financial advisor to help you understand the details of a reverse mortgage.

am i protected in any way by the federal government being involved?

Consumer protection rules are created and enforced by the Federal Housing Administration (FHA). These rules are designed to ensure that each consumer is fully aware of the details for each transaction. The rules also place limits on costs and fees associated with the reverse mortgage process.

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what kinds of rules apply to all FHA-insured reverse mortgages?

The following rules appy to all FHA-insured reverse mortgages:

▪ Limits on the interest rate and origination fees

▪ A ceiling on the eventual repayment — it can never exceed the value of the home when the property is sold to pay back the reverse mortgage

▪ Required advance counseling by an independent counselor who can answer any questions you have about reverse mortgages

▪ Advance disclosure so that you are made fully aware of the costs involved with a reverse mortgage

am i required to receive counseling before i get a reverse mortgage?Yes, counseling is a very important consumer protection required by law for the FHA program. You can complete face-to-face counseling from a local HUD-approved counseling agency, or by telephone from a national counseling agency. Your loan officer will provide you with a list of counselors that can complete both face-to-face and telephone counseling sessions.

Even seniors with an outstanding first mortgage or other debt on their home may qualify for a reverse mortgage.

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are the funds from a reverse mortgage considered taxable income?Funds from a reverse mortgage are not considered income. It is money you have borrowed against your home and therefore is not considered taxable income.*

can funds from a reverse mortgage affectmy social security or government benefits?If you receive a lump sum or monthly payment from a reverse mortgage, any amount retained the month after you get it would count as a resource and could affect Medicaid or SSI coverage. To be safe, always consult a tax advisor or benefits expert.

*Consult your tax advisor regarding your particular situation. 8

the financial requirements of the reverse mortgage program:

The Department of Housing and Urban Development has issued a financial assessment for reverse mortgage borrowers that will take effect for reverse mortgage loans with a FHA Case Number assigned after April 27, 2015. FHA’s Financial Assessment identifies specific criteria that a lender must consider when assessing a borrower’s ‘ability and willingness’ to meet the loan’s financial obligations after closing.

While a reverse mortgage does not require monthly principal and interest payments, it does still have financial obligations that must stay current to avoid defaulting. Property taxes, homeowners insurance, and general maintenance to keep the home within FHA standards are the primary obligations. Financial Assessment has been designed to evaluate a borrower’s ability and willingness to keep these obligations current.

▪ Credit history using credit report from all 3 national credit bureaus

▪ Income from retirement accounts, Social Security, employment or investments assets

▪ Payment history on property taxes, insurance, and homeowners’ fees

▪ Debt, including medical bills and credit cards

under this new financial assessment, all lenders must take into account:

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This special type of home loan lets homeowners convert a portion of their home equity into cash, providing for a more secure financial future. They may do this without selling the home, giving up title, or taking on a monthly mortgage payment.

▪ Income and credit history documentation will be required.

▪ All lenders will be looking at this documentation to evaluate both your ability to pay your property expenses; and your history of paying those same property charges in the past.

▪ It is a big picture evaluation where reverse mortgage credit line proceeds and the elimination of current mortgage payments are taken into consideration.

▪ Borrowers that do not pass financial assessment may still qualify. Borrowers may be able to use loan proceeds that are set aside by the lender to pay these ongoing charges. If there are no additional loan proceeds available to set aside, it is possible that the borrower may not qualify.

what you need to know:

the financial requirements of the reverse mortgage program, continued:

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You own your home and retain title throughout the life of a reverse mortgage.

who has the title to my home when i have a reverse mortgage?You keep title to your home when you have a reverse mortgage, just the same as with a regular home mortgage. While you retain title to your home, the reverse mortgage lender does have a lien on the home.

am i required to pay anything to the lender during the course of the reverse mortgage loan?No, payments are not required. The flow of payments is reversed — the lender pays you. As the homeowner, you will still be responsible for making payments for your homeowner’s insurance and property taxes, and maintaining the condition of your home. Foreclosure may occur if the consumer (1) lives somewhere other than the home longer than allowed by the loan agreement; or (2) does not pay property taxes or insurance premiums.

after getting a reverse mortgage

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are there any limits on how i can use the funds from a reverse mortgage?

No, you may use the funds for any purpose. Reverse mortgages are commonly used for a variety of things, such as paying health care expenses, supplementing retirement income, financing home repairs or even visiting friends and family. Some have used a reverse mortgage to purchase recreational vehicles, start a small business, and travel. Others have used reverse mortgages to eliminate expenses by paying off mortgages and credit card debt. Please consider your personal financial goals and objectives and how a reverse mortgage could fit in to them.

how are interest charges on a reverse mortgage determined?With a reverse mortgage, you are charged interest only on the proceeds that you receive. Interest compounds over the life of the loan until repayment occurs. Historically, only variable interest rates have been available, but there are now also fixed rate loan programs available. Your loan officer will provide you with the interest rate that is currently available and explain the differences between the fixed rate and variable rate options.

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repayment of the reverse mortgage:

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how much will be owed when my reverse mortgage comes due?At the time the reverse mortgage is repaid, the balance will be the sum of funds advanced, accrued interest, plus any fees.

what happens if i move out of my house after i get a reverse mortgage?Reverse mortgages can only be made on owner-occupied dwellings. You may live away from your home for up to 12 consecutive months before the loan must be repaid. Reverse mortgages become due when the borrower dies, permanently moves out, or sells the home.

what happens when my house gets passed to my heirs?When the ownership of your home passes to your heirs, the reverse mortgage will become due and payable. Your heirs may either pay the balance due on the reverse mortgage and keep the home, or sell the home and use the proceeds to pay off the reverse mortgage. If they sell the home, they get to keep any excess sales proceeds.

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Top marks to the service. Lots of docu-ments but very easy to sign — all outlined for me. I never had any problems with all the other servicing people and appreciated the fact that nobody talked down to me. – Barbara T., 68, Camas, WA

No way that you could have provided better service... Everything went so smoothly, I couldn’t believe it! I never had to leave my house for anything. All the peo-ple I was in contact with were so wonderful, especially the loan officer and the appraiser, who was very nice.

– Velma Jean B., 82, Payson, AZ

Questions?I’m here to help!

Call Jackie Stults at (618) 244-3690

Or e-mail me atJackie.Stults@Resolutefsb.com

Click on my picture to learn more!

NMLS #787308

® 2016 Resolute Bank, all rights reserved | Booklet design by Micah Edel, www.mistermicah.com.A reverse mortgage is a loan that must be repaid. Always consult with your tax advisor, financial planning professional or real estate professional. Payment of property taxes, homeowners’ insurance, HOA dues (if applicable) and general maintenance of the property is required. Failure to abide by the terms and conditions of the loan, or occupancy requirements of the loan, could result in the loan being called due and payable, which could ultimately lead to foreclosure. A reverse mortgage may affect eligibility for some government programs such as SSI and Medicaid. In order to retain the home when the reverse mortgage becomes due, the borrower(s) or the borrower’s heirs or estate must pay the entire loan balance which may be greater than the value of the borrower’s home. A line of credit could end if borrowers outlive their money and exhaust all available funds (tenure pay-ments are guaranteed). Borrowers would be required to pay off the reverse mortgage during the borrower’s lifetime if they choose to sell the home.

NMLS # 531629