As Finance of America Reverse LLC (FAR) continues to innovate in the proprietary reverse mortgage market, it becomes increasingly important to meet the needs of our customers with various rate and pricing solutions. As a result, FAR introduced a premier suite of financial tools, called HomeSafe®, that empower our customers with personalized plans to meet their retirement financing needs.
HomeSafe® Product Suite
HomeSafe® tools allow borrowers 62 and older to maximize loan proceeds or provide an alternative for prospective borrowers who do not otherwise qualify for a HECM; offering a maximum principal limit of $4,000,000. HomeSafe® also has an added benefit of being able to use loan proceeds to pay off debt at funding in order to meet the residual income guidelines. The HomeSafe® is offered with a tiered product structure that provides the following options:
- If you are rate sensitive, we have a low-rate option
- If you are more cost sensitive, we have an option that maximizes lender credits
- We can also maximize principal limits if that is a concern
- If you fail a financial assessment there is the HomeSafe LESA option
The HomeSafe® suite include the HomeSafe® Standard, HomeSafe® Flex, for Purchase, HomeSafe® Second, and HomeSafe® Select. This article provides a deep dive into a scenario where the HomeSafe® Standard product maximizes the borrower’s benefits.
HomeSafe® Standard Solution
The HomeSafe® Standard product provides an ideal financial solution for those looking for a fixed rate option to increase their cash flow without paying a lot of fees. This solution delivers the lowest cost along with the largest cash payout. HomeSafe® Standard is a non-recourse loan like the HECM, however there are lower fees with no mortgage insurance premium. The HomeSafe® allows for the proceeds to be used to pay off debt. FAR uses similar counseling and disclosures requirements as HECM’s to protect the borrower.
Ideal Borrower Scenario
To help illustrate how the HomeSafe® Standard can be used, here is an example scenario where the HomeSafe® Standard maximizes the borrower’s benefits:
Mr. Williams is looking to pay off his mortgage and credit card debt. He would also like additional funds for some home improvement and liquidity.
Mr. Williams’ home is valued at $2,000,000 with an outstanding mortgage of $500,000. In addition, he has $50,000 in credit card debt.
Using the HomeSafe® Standard solution, Mr. Williams has a principal limit of $685,011. After paying off the mortgage, Mr. Williams has $185,011 to meet his financial goals.
HomeSafe® Standard Benefits
In this scenario, the HomeSafe® Standard solution helped Mr. Williams achieve his financial goals of paying off his existing mortgage and credit card debt, as well as provided him with cash for home improvements and liquid funds.
It should be noted that this example is for educational purposes only. With any reverse mortgage, the borrower must meet all loan obligations, including living on the property a principal residence and paying property charges, including property taxes, fees, and hazard insurance. In addition, the borrower must also maintain the home. If the homeowner does not meet these loan obligations, the loan will need to be repaid.
FAR follows the same Financial Assessment qualifications as the FHA HECM product. The HomeSafe® is a non-recourse loan and the borrower or their heirs have no personal liability for repayment of the loan and can never owe more than the loan amount or appraised value, whichever is lower. There are no prepayment penalties, however on the fixed rate HomeSafe® a borrower cannot redraw prepaid funds.
Reverse mortgages, with their built-in consumer safeguards and flexible options for accessing equity, are transforming the way people approach retirement. With any financial decision, it is important to carefully consider your options. The right financial advisor can guide you to a great decision that works with your financial goals.