Kevin's Corner

Cash Account Advantage

What is constant…is change. A very wise and forward thinking statement particularly for the reverse mortgage business. Yes, it is now a business and not just a product. What is changing are the new products available in the market place. This is very important not just for new people considering a reverse mortgage but to many of you who have considered a reverse mortgage but for some reason or another decided they were not for you.

As new investors enter into this business, they are going to bring product innovation that will focus on early objections and provide better solutions. As I have always maintained, I am not in the product business but in the retirement solution business. The new versions of reverse mortgages will provide enhancements to make the product more palatable to new consumers.

With that said, I am happy to present to you the latest in product innovations that was recently introduced by a leading private industry lender for reverse mortgages. The new product is called the “Cash Account Advantage” and offers a much higher equity release, a lower interest rate and more flexible options than the previous Cash Account. This new product will allow more seniors to safely convert a greater portion of their home equity into usable, tax free cash than was previously available.

The standard product, the FHA Home Equity Conversion Mortgage (HECM) is a fantastic product and will continue to be the industry leading product but because the product has a cap on the home value considered, the product may not meet the needs of homeowners with property values over $500,000. The Cash Account Advantage is a great alternative that can provide homeowners which a much better equity release. The other issue for the HECM is the high upfront costs which can run as high as $17,000 depending on property values. The Cash Account Advantage has a much lower upfront cost and in the case where the borrower takes all of the available proceeds at closing, some or all of the closing costs are waived depending on the amount of proceeds received.

This product also requires independent consumer counseling so potential clients get a clear understanding about the product without the pressure from a salesperson. Unfortunately, we have a product offering from a local institution that has the loan salesperson do the counseling, what a conflict of interest!!! Don’t be fooled, independent counseling is the only ethical way to do it.

The interest rate on this new product begins with a start rate of 8.99% and will adjust every 6 months. The index for this product is based on the 6-month LIBOR rate and has a lifetime interest rate cap of 6% over the start rate. The LIBOR rate is an international rate which is based upon the economies of the US and Western European countries and is well know to less volatile than the US Treasury Yields or Prime Rate.

Product innovation is going to drive the reverse mortgage business in the future as getting a reverse mortgage will be as common as getting a home equity loan. As more eligible property owners become aware of the significant benefits, low risks and ease of availability, everyone will have one.

The key for anyone considering any of these solutions is selecting a lender with high integrity, ethical behavior and experience. So if you are ready to learn more about this fantastic new development in the reverse mortgage business, even if you have checked them out before, then give me a call. I take the time and have the experience to provide real value to you about how reverse mortgages work and whether or not they are appropriate for you. I would never bring an application to an initial interview it is inappropriate and rude. So, let’s have a conversation, discuss all the products, how they’re priced, what the pluses and minuses are and see if it works for you. No pressure. No pushy sales pitch. Information and advice.

You owe to yourself to find out about how these things work. Give me a call, you won’t regret it. 1-800-496-4035.

Senior Security Capital