janjordan, Author at Colorado Reverse Mortgage Specialist - Jan Jordan

Author: janjordan

What Rising Interest Rates Mean for Reverse Mortgages

Posted on December 30, 2016January 2, 2017 by janjordan

Interest rates have been at historic lows for years. This has afforded thousands of Americans to the ability to secure home loans for their dream house. It’s also worked in favor for those who have made the decision to tap in their home equity using a reverse mortgage. But interest rates affect a conventional loan differently than a reverse mortgage.

HECM reverse mortgage are insured by the Federal Housing Administration (FHA), and are available to homeowners 62 and over. These tax-free loans convert a portion of home equity into cash without incurring a loan payment. Borrowers can access the funds via monthly installments, line of credit, a lump sum, and even to purchase a home. The Department of Housing and Urban Development (HUD), which regulates the reverse mortgage industry, sets a “floor” rate of about 5%. As interest rates rise and fall above this floor rate, borrowers will receive less or more in proceeds. In fact, even a small rise of 1% above the floor rate can decrease available funds by as much as 20%.

Fortunately, once a homeowner has tapped into a reverse mortgage they lock in the interest rate and proceeds will never decrease, no matter what the market does, and the funds available will increase over time when using the line of credit option. In addition, even if the home decreases in value below the amount of their loan proceeds, they will never be responsible for more than the home is worth.

Bottom line: with interest rates on the rise, now is the time to act if you’re considering a reverse mortgage.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado. Click here to contact Jan and learn if reverse mortgage is right for you.

Harvard Study Predicts Surge in Senior Households

Posted on December 23, 2016January 2, 2017 by janjordan

A recent report by the Harvard Joint Center for Housing Studies, Projections and Implications for Housing a Growing Population: Older Adults 2015-2035, it is predicted that by 2035 one in five people will be aged 65 and older while one in three households will be headed by someone of that age and older.

The report included the use of a reverse mortgage as an important financial tool for older Americans in the future and cited it as a source of funds making it feasible to age in place. The study also analyzed the amount of debt those in the 65+ age group will still have, including existing mortgages.

“For those with mortgages they cannot afford but who still have substantial home equity, reverse mortgages may make it more financially feasible to age in place,” says the report.

Also discussed in the report was the strong desire older adults have to continue to live their home while they age. This will require those in the retirement planning community to look at creative options to fulfill the needs of their clients. Reverse mortgage can fit strategically into many different scenarios.

Reverse mortgage is an individualized, specialized loan for those 62 and older that allows seniors to tap into the equity of their home while living mortgage and loan payment free. The funds can be accessed via a lump sum, line of credit, monthly installments, or even to purchase a home.

2017 to See Increase in Reverse Mortgage Loan Limit

Posted on December 13, 2016January 2, 2017 by janjordan

It’s been several years since the Federal Housing Administration has raised the loan limit for reverse mortgages, but in 2017 the industry will finally see an increase. Currently the HECM loan limit is $625,500 and this will rise to $636,150. This new limit will apply only to case numbers issued on or after January 1, 2017.

This increase is accompanied by an increase in the national conforming loan limit which will expand to $424,100. The national conforming loan limit hasn’t seen a boost in over a decade and is expected to result in higher mortgage volume.

In addition, the FHA will increase its national loan limit “floor” to $275,665 in 2017 from $271,050 and its loan limit “ceiling” in high-cost areas would rise to $636,150 from $625,500. The floor is determined at 65% of the national conforming loan limit, while the ceiling figure is 150% of the national conforming loan limit.

According to National Mortgage News:

FHA determines its loan limits for forward mortgages based on median home prices. Limits are set by metropolitan statistical area and county. FHA said that maximum loan limits for forward mortgages increased in 2,948 counties and remained the same in 286 counties. The loan limits did not decrease in any part of the country, according to the announcement.

Use a Reverse Mortgage Line of Credit to Fund In-Home Care

Posted on December 6, 2016January 2, 2017 by janjordan

According to statistics, there’s a 70% chance seniors over 65 will need some sort of long term care such as in-home care, skilled nursing, or assisted living at some point during their lives. Although there are various ways to pay for such care, like Medicare, Medicaid, or health insurance, these options often come with limits and additional costs.

For homeowners 62 and over reverse mortgage should be another option considered to fund long-term care. These tax-free loans convert a portion of home equity into cash without incurring a loan payment. Borrowers can access the funds via monthly installments, line of credit, a lump sum, and even to purchase a home.

The reverse mortgage line of credit is a great option when facing the future needs of long term care. This option allows homeowners to secure this FHA insured loan at the current interest rate, then only use the funds when needed – and the line of credit grows as the borrower ages.

Unlike a traditional loan or a Home Equity Line of Credit (HELOC), there are no loan or mortgage payments as long as the borrower lives in the home. The line of credit comes due either when the last borrower permanently moves out or passes away, in which case the heirs or the estate could pay the loan back either through sale of the home or other means. Depending on how much of the line of credit has been tapped, this could result in significant equity left to heirs. If you never used the line of credit, the equity would still be in place and would pass to heirs along with the home.

How to Help Your Parents with a Reverse Mortgage

Posted on November 8, 2016January 2, 2017 by janjordan

Perhaps your parents raised you in the home they are now still living in. As you see them begin to slow, or have to jump on a plane every time they wish to see you, thoughts of helping them to have an easier time come across your mind. After all they deserve at this time of their life to relax, do what they wish to do, and be able to manage their health and their finances with comfort.

Considering a reverse mortgage is one good option. It gives more wiggle room to work with when balancing the growing needs of health, home, and retirement.

As you discuss the future and it’s possibilities, there are a few questions to ask yourself and everyone else involved.

First, do you or other siblings have concerns about inheritance and/or equity? Your parents probably care that all of you feel you have received from them as they pass. While this discussion is not always easy, it is undeniably beneficial. Talking will give clarity, which in turn provides direction. It also gives everyone a chance to be heard.

Second, do you have financial resources to help your parents? Health needs as we age are difficult to determine, but it is important to build in a buffer for the unexpected. The stress of aging is enough in and of itself, being able to take care of the costs should not have to be an additional worry for those that raised you.

Another good question that only your parents can answer is, ‘What are my parents’ wishes about staying in their home, especially if their medical needs grow?’ For some, they are ready to let go of the home of their youth and family, wanting to change and simplify their lifestyle. For some, being closer to you is the most important desire. And for some staying in their home as long as possible is the most important wish that could be fulfilled. Since the decision about reverse mortgage as a way to fulfill desires is a big one, looking toward the future and developing a plan will only benefit everyone – and ultimately make your parents happy.

Does My Home Qualify For A Reverse Mortgage?

Posted on October 21, 2016December 19, 2016 by janjordan

Reverse Mortgages are a specialized loan available to seniors 62 and over. This creative resource is used by a wide demographic – from those looking to supplement a fixed income, to the more affluent in need of protection for retirement assets, and even those wanting to purchase a home in retirement. But there are some requirements when it comes to the actual home…

Which types of homes are included?

According the HUD’s Federal Housing Administration, the home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. Some condominiums and manufactured homes that are approved by HUD also meet FHA requirements.

In the case of a Reverse Mortgage for Purchase, borrowers can use a reverse mortgage to purchase a single family home or 2-4 unit home with completed construction that has received a certificate of occupancy.

Are there reasons my home may not qualify?

A home with very little equity may not qualify, although homes with existing mortgages may.

In addition, homes must be maintained with general upkeep and be current on property taxes and other expenses relevant to the home.

A second home or vacation home may not qualify. The borrower must be living (or plan to live) in the home.

Bottom line

The funds from a reverse mortgage can be accessed via a lump sum, line of credit, monthly installments, or to purchase a home. If you have questions let your specialist guide you in the many scenarios that are possible and the two of you can think creatively about your needs and desires.

Why a Reverse Mortgage is a Good Financial Strategy

Posted on October 14, 2016December 28, 2016 by janjordan

Reverse mortgages are available to seniors 62 and over who either have their home paid off or have substantial equity. Certain criteria applies to the home in order to meet HUD’s rules, and although anyone on the loan must be 62 and over, they are available to married couples the same as individuals. The funds available from these FHA insured loans are available in various ways including monthly installments, a lump sum, a line of credit, and as a purchase option. Even with all these funding choices, reverse mortgages are not right for everyone but they are a perfect match for many.

When is Reverse Mortgage a good financial strategy?

Think of reverse mortgage as a financial tool that turns home equity into cash WITHOUT incurring a loan payment, unlike a traditional mortgage or home equity loan. No repayment is due as long as the borrower is living in the home. This also goes for married couples, in which case no repayment would be due until the last borrower permanently leaves the home. The borrower will still be responsible for some things related to the home, such as property taxes and homeowners insurance.

Reverse mortgages are increasing in popularity as more retirement and financial planners are recommending their use as a potential tool. Typically retirement planners have used a three legged stool as an example for their clients – saving, social security, and pensions make up this visual structure. But with changes in the economy and uncertain futures, pensions are disappearing. In this scenario, those who are “house rich, but cash poor” may find using home equity to balance out the stool is a saving grace. In addition, for those secure in all three areas, adding home equity can be used as a safety net or to delay, thus enhance, certain areas.

The reverse mortgage industry underwent some changes last year as legislation was passed making these loans a safer option for both borrowers and lenders. As a result, the reputation that once surrounded the industry has drastically improved and their use is being studied by some of the most prominent retirement experts.

Reverse Mortgage For Purchase – Everything You Need to Know

Posted on October 7, 2016October 13, 2016 by janjordan

Reverse Mortgages, once typically thought to only help struggling seniors, have undergone enormous changes recently and are being used to help even affluent retirees achieve their retirement dreams and home buyers purchase new homes.

The Reverse Mortgage for Purchase program is quickly gaining in popularity. This program allows seniors to purchase a home using a reverse mortgage and live mortgage payment free. To qualify for this program, borrower(s) simply need to be age 62 or older, be purchasing a home to become their primary residence, and have their “required investment”. There are no income or credit requirements and just like with any other type of home loan, the borrower will still be the homeowner and will always retain the title. In addition, similar to a homeowner who owns their home free and clear, there will not be a monthly mortgage payment but the borrower will still be required to pay property taxes, homeowner’s insurance, HOA fees, and basic upkeep and utility payments.

The borrower can use this loan to purchase single family homes, town homes, and FHA approved condos. Unfortunately, these loans cannot be used to purchase homes under construction and the home must have a “Certificate of Occupancy” issued prior to starting the application process.

As mentioned above, the borrower will need to have their “required investment” or down payment. This amount is determined by a calculation set by HUD based on: the lesser of the sale price or appraised value, the age of the youngest of the borrowers, and the current expected interest rate. There are many examples available of these numbers to help real estate professionals and borrowers determine the price bracket they should search based on the required investment they have available.

Unlike a traditional mortgage where the loan reaches a “maturity date”, reverse mortgages have a “maturity event”. This is the event which causes the loan to become due and payable. These “events” include: the last remaining borrower passes away, the homeowner sells the home, the last remaining borrower leaves the home for 12 consecutive months, or the homeowner defaults on property taxes or insurance.

Prior to being approved for a reverse mortgage, HUD’s Federal Housing Administration (FHA) requires each borrow to participate in a counseling session with an approved agency. These not-for-profit agencies are funded by the federal government and work closely with both the FHA and lenders to ensure a smooth process. The goal of this session is not to steer a potential borrower in one direction or another, but to make sure they clearly understand all aspects of a reverse mortgage.

Jan Jordan Reverse Mortgage Info for Fort Collins, Loveland, Greeley, and Front Range areas of Colorado.

Colorado Home Appraisals in High Demand

Posted on September 30, 2016December 19, 2016 by janjordan

Colorado’s housing market is hotter than ever. Home prices are high, inventory is moving fast, and home appraisers are struggling to keep up with the demand. Because of this, when scheduling a home appraisal, the wait time between scheduling and the date of the actual appraisal is on average 4-5 weeks – and sometimes more. The cost of appraisals are also creeping up as the market stretches those in the profession thin. This is great news for for those invested in the housing market because it shows a positive uptick in Colorado’s economy. But it can cause problems as well, especially for those who are expecting the process to move fast.

What does this mean for Reverse Mortgage?

A critical part of the reverse mortgage process is the home appraisal. This is the case whether obtaining a traditional reverse mortgage or a Reverse Mortgage for Purchase. The appraised value of the home is one of the important factors that determines the amount available through the reverse mortgage loan (or in the case of a purchase loan, the amount available to purchase the home). With appraisals being a hot commodity in Colorado, if you’re considering a reverse mortgage, don’t drag your feet! Get your application in now so we can get your appraisal on the books and locked in!

Other factors that play into the amount available through a reverse mortgage are the age of the borrower (or the youngest borrower in the case of a married couple) and current interest rates.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado. Contact Jan and learn if reverse mortgage is right for you.

Retire in Comfort – How a Reverse Mortgage Can Help

Posted on September 16, 2016October 12, 2016 by janjordan

For many who remember the reverse mortgage scares of the yester-years, the terms ‘comfort’ and ‘reverse mortgage’ seem like an unlikely duo. But they shouldn’t be.

Since the FHA and HUD changed a few regulations stabilizing reverse mortgages in 2015, they have quickly been garnering new attention. Whether looking to boost monthly income, protect retirement, or even purchase a new home, reverse mortgage is proving to be a versatile and creative tool.

Here are three ways a reverse mortgage can help make retirement more comfortable:

1.) Supplement retirement income. With a whopping 36% of baby boomers planning to live on nothing but Social Security for retirement, utilizing a reverse mortgage to supplement retirement funds with non-taxable income from the equity of an individual’s home is a great option. The funds can be accessed via monthly payments or a line of credit, and because the loan doesn’t come due until the borrower passes away or permanently leaves the home, they can live their retirement years both financially comfortable and in the comfort of their own home.

2.) Protect and enhance retirement portfolio. For those who have a well prepared plan for their retirement, using a reverse mortgage line of credit to supplement their nest egg can offer great flexibility and even enhance wealth. Some simply want to use the funds to delay Social Security until they can receive the largest amount. Others may have investments they are looking to protect or allow to mature. Retirement and financial planners are now discussing how a reverse mortgage can be used as part of a long term retirement plan.

3.) Purchase a retirement home. It’s still a little known fact that a reverse mortgage can be used to purchase a new home – but it can, and it’s a great fit for so many retirees. Whether looking to moving in to a senior community, move closer to family, or move to a dream home, using a Reverse Mortgage for Purchase should not be overlooked. This amazing program makes the once impossible possible when it comes to home buying.