Real estate

Guild announces new ‘Flex Payment Mortgage’ suite of reverse products

Guild Mortgage announced Wednesday the introduction of a new product line called the “Flex payment mortgage“, inclusive Federal Housing Administration (FHA) sponsored Home Equity Conversion Mortgages (HECMs), refinances, equity jumbo options and HECM for Purchase (H4P) loans.

“Guild’s Flex Payment Mortgage is a family of products that are federally insured [HECMs] with options for larger loan amounts and the reverse mortgage for purchase,” the company said. “With a Flex Payment Mortgage, older homeowners can withdraw money from the equity they have built up over the years, without having to sell their home.”

Citing data indicating an overwhelming desire among older Americans to age in place, the company said the product line “will enable a homeowner age 62 or older to pay off the remaining balance on their existing mortgage, the cost to supplement their livelihoods, for lifestyle improvements or renovations, or to stay closer to their family and community.”

Converting equity into available cash can be accomplished without impacting Social Security or Medicare benefits, the company said. Proceeds from HECM loans do not qualify as income for tax purposes. The company aims to position this product line as an alternative option to the more traditional home equity loans or home equity lines of credit (HELOCs), which are equity tapping products and typically have a higher penetration rate than reverse mortgage products.

“These mortgages are different [from] mortgage loans or lines of credit because they are based on the value of a customer’s home and not on their ability to make monthly principal and interest payments, or on their credit score,” the announcement said.

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“There is no minimum credit score required for a Guild Flex Payment Mortgage. As with most federally insured HECMs, the loan balance, including interest, will never exceed the value of a borrower’s home, providing the assurance that they will never owe more than their home is worth.”

The same obligations of a traditional HECM – namely property tax tracking, insurance maintenance, and (if applicable) HOA fees – must be maintained to avoid foreclosure.

Jim Cory, director of Guild’s reverse division, said the company’s growth in this sector necessitated additional product options for a greater number of borrowers.

“Our reverse mortgage business has grown dramatically over the past year and a half as Guild meets this demand with options like Flex Payment Mortgages, including reverse mortgage payments, and reverse mortgage retention services,” said Cory, who joined Guild when it company took over the mortgage. Colorado based Cherry Creek Mortgage and folded its inverted division into its own operations.

“As part of our relationship-based, customer-for-life approach, we want to help educate our partners and older homeowners across the country about the best ways customers can use their home equity in retirement.”

The Flex Payment Mortgage line includes multiple payout options for loan proceeds, including advances for home purchases; a lump sum; a line of credit (which Guild describes as a “flexible” option); regular monthly payments; or a customized combination.

“Customers can continue living in their home without making loan payments if they meet the terms of the Flex Payment Mortgage,” the company explains, detailing similar terms already applicable to HECM loans.

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“Alternatively, they may choose to make voluntary payments to minimize accrued interest or reduce the overall loan balance, potentially leaving more equity in the home for their heirs.”

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