Author: janjordan

What Exactly is a Reverse Mortgage Line of Credit?

Posted on by janjordan

Reverse Mortgage for Purchase Loveland Fort Collins Greeley Longmont Westminster Colorado Cheyenne Laramie WyomingReverse mortgages aren’t new, but the shifting perspective on them certainly is.  After undergoing various regulation changes the past couple years, everyone is taking a second look.  Real estate agents are seeking more information on the Reverse Mortgage for Purchase so they can offer this option to their senior buyers.  Adult children are realizing the myths they’d heard over the years are just that – myths.  And now retirement experts are suggesting adding home equity into the equation when helping retirees plan for their golden years.

 

Reverse mortgages are very versatile when it comes to ways to access funds, but this article is going to focus on one that is quickly gaining in popularity – the Reverse Mortgage Line of Credit.

 

What is a Reverse Mortgage Line of Credit?

 

The line of credit option allows homeowners to tap into the equity of their home and have access to the funds whenever needed, but unlike a lump sum or monthly payments, they don’t have to withdraw any funds at all and can keep it as a safety net.  Or the funds can be used when needed to supplement retirement income.  The options are endless.

 

How is the amount on a line of credit determined?

 

Just like all reverse mortgages, the amount is determined based on the age of the borrower and the appraised value of the home.  The older the borrower and the more the home is worth, the larger the line of credit will initially be.  Borrowers also are not required to use all the available equity in their home as the line of credit, and they have options to combine it with other funding sources such as monthly installments or even a home purchase.

 

Will the line of credit funding amount ever change?  

 

Yes and no.  Unlike other reverse mortgage funding options, a line of credit will increase at a compounding rate determine by HUD – and on the flip side, it will never decrease even if home values depreciate.

 

Why get a Line of Credit now rather than wait until I’m sure I need it?  

 

Retirement experts are recommending to many clients to include the reverse mortgage line of credit in their retirement portfolios from the get-go for various reasons.  One, the housing market is strong right now and appraised home values are high.  Two, as the years go on, these programs change and it may not be available in 10 years, but anyone who has an already established line of credit will always be ‘grandfathered’ into the program, even if it is eliminated in the future.  And three, in the case of economic downturn where investments are affected, having the line of credit immediately available can be a future safety net.

 

Is a Reverse Mortgage Line of Credit FHA Insured?

 

Typically yes, as long you are working with a reputable reverse mortgage lender, the line of credit will be FHA insured just like any other reverse mortgage product.  This means there are protections and guarantees in place for the borrower that will never falter.

 

Reverse mortgage are available to seniors 62 and over throughout Colorado and Wyoming.

 

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

5 Interesting Facts About Reverse Mortgages

Posted on by janjordan

ID-10083591Reverse mortgages have made a serious comeback in the past couple years.  After regulation changes were enacted in 2015, the reverse mortgage loan once considered a desperate lifeline is now being used as a retirement tool for even the wealthy.  The loans are still only available to seniors 62 and older (including married couples) with the amount of funds available increasing depending on age and appraised value of the home, but now those funds are often being accessed in ways not available before – such as a line of credit or to purchase a home.  This really is not your mother’s reverse mortgage, it’s something much more versatile than it was years ago.

 

Here are some lesser known facts about today’s reverse mortgage:

 

1.)  I’ve said it before and I’ll say it again – the borrower will always remain the homeowner as long as basic responsibilities such as property taxes are paid, homeowners insurance is kept current, and utilities and HOA fees are paid.  One of reverse mortgage’s scariest myths has always been that a bank will own the home.  This couldn’t be further from the truth.  Not only will the borrower remain the homeowner, they will also retain the title.

 

2.) There are NO mortgage or loan payments.  That’s correct.  Regardless of how the borrower decides to utilize the reverse mortgage funds, they will not pay a loan or mortgage payment while they remain in the home.

 

3.) With a Reverse Mortgage for Purchase, borrowers can wrap both the home purchase and the reverse mortgage into the same transaction allowing them to buy their dream home – AND the reverse mortgage will substantially supplement purchasing power allowing a home to be purchased that may have once been out of their price range.  When using a Reverse Mortgage for Purchase, the borrower is required to provide some down payment and the reverse mortgage funds will make up the rest of the purchase price.

 

4.) Married couples can both be on the loan regardless of how the funds are utilized.  Another all too common myth is that in the case of a married couple, if one spouse passes away the other spouse will be evicted.  When working with a reputable reverse mortgage lender this should never happen.  As long as both spouses are 62 or over, they can both be on the loan allowing either borrower to stay in the home until the last spouses passes away or permanently leaves the home.

 

5.) Heirs are not “saddled” with the debt of a reverse mortgage.  After the borrower(s) pass away, there are several options as to what the heirs can do with the home.  And in today’s hot housing market, the home may gain equity that can be available to the heirs.  Most all reverse mortgages are FHA insured meaning the loan will never exceed the amount of the home sale – even if more is owed, and it also means it will only ever require the amount of the loan even if the home is worth much more when it comes due.

 

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

 

How to Find a Reputable Reverse Mortgage Lender in Colorado

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoFor many seniors, a reverse mortgage is a feasible option to living within a budget, without the constraints and worry of excessive financial distress.  In order to qualify for a reverse mortgage, the individual must own their home, be at least 62 years old, and have some equity in the home.  Funds from a reverse mortgage can be accessed in various ways including a line of credit, monthly installments, a lump sum, and they can even be used to purchase a new home. In general, the older the borrower (or the youngest borrower in the case of married couples) and the more valuable the home, the more money available.  Other factors also come into play, such as: the appraised home value, interest rates, and the amount of equity in the home.  Once a basic understanding of how a reverse mortgage works, the next step is finding a lender.

 
Where to find a lender?

 

Reverse mortgages are marketed in every possible way.  Television, radio, mailers, internet, etc.  Although not all of these methods ensure trouble, some of them can be scams.  When seeking a reverse mortgage lender, it’s important to speak with people you trust.  Ask around at your bank or financial institution.  Speak with a financial or retirement adviser.  Talk with neighbors or friends who have utilized a reverse mortgage.  Seek information from the local Chamber of Commerce or Better Business Bureau.   Utilize other resources that may be available in your community.

 

What to look for in a reverse mortgage lender?

 

Working with a reputable reverse mortgage lender is critical.  The reverse mortgage industry is riddled with scams and flashy sales.  It can be risky to get involved with a lender who does not offer all the details or who is just looking to make a “quick sell”.   A reputable lender will have strong connections in the community, working closely with a network of professional organizations.

 

Accreditations and ratings?

 

Seek out a lender that is a member of the National Reverse Mortgage Lenders Association (NRMLA).  Members of the NRMLA must conform to a strict code of lending ethic.  Look for a lender that is affiliated with the  Better Business Bureau (BBB), where you can also learn of any complaints against the company.

 

Follow your gut.

 

When it comes down to it, always follow your gut.  Just because a lender may meet all this criteria doesn’t mean they will be right for you.  If you do not feel comfortable or feel your questions are not being adequately answered, there is nothing wrong with seeking out a different lender.

 

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

Reverse Mortgage in Colorado – 5 Quick Facts

Posted on by janjordan

Reverse mortgage colorado loveland fort collins greeley longmont boulder

The Reverse Mortgage, created to aid the realization of retirees dreams, will be in your face if you have approached, or are approaching, the eligible age of 62. As with the all special offers across Colorado, marketing can promote it in such a way as to allure you – or to terrify you.

 

There are a number of points to know when you begin to learn about reverse mortgage. These are simple facts and not marketing strategies.

 

1.) First of all, married couples can both be on the reverse mortgage loan if they are both over the age of 62. This means when one passes, the other can continue living in the home under the same agreement. No changes take place just because both are no longer in the home.  This gives the remaining spouse a true security as they navigate through the transition of losing their life partner.  The same would apply if one spouse was to leave the home permanently and move into an assisted living facility.  As long as both partners are on the loan,  and one still remains in the home, nothing changes.

 

2.)  Second, there are NO monthly mortgage payments. So long as the borrower(s) remain in the home as their primary residence, their only financial responsibilities are the homeowner’s insurance, HOA payments, property taxes and basic upkeep/utilities.  This is the case whether a traditional reverse mortgage is acquired, or a reverse mortgage to purchase a home.  No mortgage payments, ever.

 

3.) Third, funds from a reverse mortgage will not affect Social Security, Medicare or pensions because they are considered “tax free” income.  They also are not declared on tax returns as income.

 

4.) Fourth, you retain the title to your home and it stays in your name.  There is not a transfer of ownership just because you drew upon the equity of your personal asset.

 
5.) Lastly, you can access the funds in various ways including monthly payment, a line of credit, a lump sum, or as a purchase.  And the funds can be used however you see fit.  Borrowers can even use a reverse mortgage to buy a new home via the Reverse Mortgage for Purchase program allowing the home purchase and the reverse mortgage loan transaction to take place at the same time.  This a great option for those who wish to be close to family, in a desired location or have a place that fits your new lifestyle, or even move to your retirement dream home.

 
Reverse mortgage are available to seniors 62 and over all over Colorado.  To learn more, contact a reputable reverse mortgage lender.

 

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

 

 

How Reverse Mortgage Helped a 100 year old Man Age at Home

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reverse mortgage colorado fort collins loveland greeley

Awhile back I closed a reverse mortgage loan for a 100 year old gentleman.  This was my first time closing a loan for someone of his age.  He lives at home with 24 hour care at a cost of $10,000 a month.  When I was sitting at the closing table with the client and his lawyer, the lawyer mentioned that that he could move to an assisted living facility at half the cost ($5,000/month).

 

This gentleman’s quick sharp answer back to everyone? “NO…. I’m staying in my home.”

 

Deciding whether aging at home, moving in with family, or moving to an assisted living facility is right for you or your loved ones can be very complicated and emotional.  Since reverse mortgages can open up opportunity to turn home equity into liquid cash, without having to move or make a mortgage loan payment, seniors and their families are often using this opportunity to pay for care that would otherwise not be covered by basic Medicare, Medicaid or health insurance.

 

Studies have shown that the benefits of aging in place can be enormous for the right candidate.  Not only can a move be both emotionally and physically challenging on a senior, especially one with medical concerns, it’s known that the quality of life tends to increase when seniors maintain their independence and their community ties.

 

With reverse mortgages being available to homeowners 62 and over, I was honored to have been given the opportunity to help this 100 year old gentleman stay in his home – where he felt the happiest and most comfortable.

 

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

Do You Need A Colorado Elder Law Attorney?

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colorado reverse mortgage fort collins denver loveland greeley windsorElder law is a relatively unknown segment of law and is often overlooked when seeking legal solutions.  But for some seniors and their families an elder law attorney may be exactly what they need.  Elder law is very broad and includes things like estate planning, probate, guardianship, real estate, nursing home neglect and a dozen other areas of law that are nearly exclusive to the elderly. Typically one lawyer will not have expertise in every area, but will instead work with a network of attorneys who can supplement in specific areas when needed and vice versa.  Also, keep in mind just because an individual is elderly does not mean they need an elder law attorney.  Elder law is focused on legal problems specific to the elderly.  Concerns with other areas of law may best be handled by attorneys dedicated to those areas.

An elder law attorney should be educated and informed on reverse mortgage.  It is common for them to receive questions from clients, former clients, and their families about reverse mortgage when establishing estate plans or when they are considering a reverse mortgage for the first time.  Although reverse mortgages can be an excellent and safe tool for many homeowners, they are not for everyone and are most effective when used as part of a financial and estate plan.  It is highly encouraged to make sure any question receives an adequate answer when considering reverse mortgage – and often elder law attorneys are part of that equation.  This can also help with avoiding reverse mortgage scams.

Here are a few questions to ask when seeking out a an elder law attorney:

  • How long has the attorney been practicing?
  • What percentage of the attorney’s practice is devoted to elder law?
  • Does his or her practice emphasize a particular area of elder law? (for instance, guardianship or other specific work)
  • How much elder law training has the attorney had, and from what organizations?
  • Is the attorney a member of the National Academy of Elder Law Attorneys?
  • Will the attorney be able to work within your time limitations?

In addition to a legal network, an elder law attorney should be familiar with the “elder network”, a network of public and private community resources to assist seniors in various capacities.  This should include a reputable reverse mortgage lender.

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

Can I Get a Reverse Mortgage if I have a HELOC on the Home?

Posted on by janjordan
Colorado Reverse Mortgage
Colorado Reverse Mortgage

The short answer is – absolutely.  And as a matter a fact, reverse mortgages are great options to eliminate HELOC payments.

 

A HELOC is the acronym for Home Equity Line of Credit, and thousands in the Fort Collins and Loveland cities have taken advantage of it. When the housing boom was in full swing a number of years ago, the values of personal homes gave their owners a strong resource to draw upon in the form of a loan.  Unfortunately many of these loans amortized, leaving the borrowers with higher than  predicted payments.

 

Seniors 62 or older with a HELOC loan may be able to utilize a reverse mortgage to relieve the financial burden.  The HECM, or Reverse Mortgage, provides the borrower with non-taxable income that will not affect social security or Medicare, and can be used for whatever the borrower sees fit. The funds from the loan can also be received in various options. Seeking the advice of a reputable reverse mortgage lender can help you make these decisions.  During the application process, the HELOC will be discussed and a options of paying it off will be laid out.

 

If you do not presently have a HELOC but are considering one, put reverse mortgage on the table for a consideration as well. There will be advantages to both options giving you a sense of freedom to have choices.

 

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

What Happens to a Reverse Mortgage After the Owners Pass?

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reverse mortgage colorado fort collins loveland greeleyA common question and concern surrounding reverse mortgage is what will happen to the home after the homeowners pass away?  Will the bank take possession?  Will it be allowed as inheritance?  Will it be possible to keep the home in the family?  Will the family of he deceased be held liable?  These are very valid concerns – so I’d like to offer some clear and concise guidance.

 

When the last homeowner passes, whether we’re talking about you or a loved one, the home will transfer into the estate or a specific person according  to the wishes expressed in the homeowner’s will.  At this time there are three main options:

 

1.  Pay off the remainder of the loan

 

Depending on the amount of equity that still exists in the home, the financial situation of the family, and just the overall ability of those involved, this may or may not be a feasible option.  It’s not uncommon for a portion of life insurance to be used in this manner.  Because these loans are FHA insured, if the loan is repaid, it will never be more than the home is worth – even if the housing market is in a deep low spot.

 

2. Obtain a conventional loan.

 

Many mortgage brokers are familiar with the reverse mortgage process and the right broker will be able to help those in need identify the best route in obtaining a conventional loan and keeping the home.

 

3. Sell the home

 

The final option is to sell the home.  When there is not a desire to keep the home, the heirs can sell the home.  When the home is sold, the loan will be repaid and any remaining equity from the sale will go to the heirs.

 

If there are no heirs or the heirs are not interested in the home, no one will be held liable.

 

One last note, as long as the communication lines remain open, the bank will typically allow up to one year to help with the transition.  This one year is allotted in three month increments.

 

 

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

Why Do Only 3% of Seniors Use a Reverse Mortgage to Purchase a Home?

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Reverse Mortgage Loveland Fort Collins ColoradoWhy is it that only 2-3% of older Americans use the Reverse Mortgage for Purchase option to buy a home?  Recent studies show that even with the option available to them, they still seek traditional funding or opt to pay cash.  Why is that?  Well, surveys have shown there are three main reasons:

 

1.) No one told them they could use a reverse mortgage as a purchasing tool.  Unfortunately this happens far too often.  Real estate agents and lenders are either not aware of this option or are not educated enough to suggest it.  If you’re a senior considering purchasing a home, be sure to ask about using a reverse mortgage.  If you aren’t given proper information, contact a reverse mortgage expert such as myself.

 

2.) Real estate agents do not have enough knowledge to adequately educate the potential buyer about this option.  If you as a potential buyer find yourself in this situation, ask who you could talk to to learn more or seek out an expert yourself.

 

3.) The third reason seniors opt for traditional financing is the down payment required to use a reverse mortgage.  The down payment amount varies based on the price of the home, the age of the borrower, and current interest rates.

 

In order to apply for a Reverse Mortgage for Purchase loan, you must be age 62 or older (each borrower on title must meet this criteria, although others residing in home do not), the home you are purchasing must be your new primary residence, you must have your “required investment” (down payment) from a HUD allowable source.

 

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

Are You Prepared to Take Care of Your Parents?

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Reverse Mortgage Colorado Fort Collins LovelandThe cost of eldercare is staggering.  And so is the toll it takes on an adult child.  Are you prepared for either?  Or both?

 

A recent MetLife study estimated that the total cost incurred by the caregiver alone (not including the costs directly related to care) is an average of $324,044.  The financially impact can be similar to having children, but without the planning.  So, how can one prepare for this?  Here are a few suggestions:
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1.) Talk with other siblings and relatives.  Have any of them considered this?  Do they have plans or ideas they haven’t shared?  Utilizing networks early on can help alleviate worry down the road.

 

2.) Talk with mom and dad.  Not always the easiest or most comfortable conversation to have, but a very important one nonetheless.  Find out what they want these upcoming years to look like, and what kind of long term care insurance, pensions, and home equity they may have.  Do they have a retirement planner that as factored any of this?

 

3.) Look into long term care options and weigh out the costs along with the pros and cons.  Although your parents are your parents, and you love them dearly, you may not be the best option as a caregiver among the many options available today.

 

4.) Consider a reverse mortgage.  The once frowned upon reverse mortgage program is now being utilized to brighten long term retirement scenarios.  This FHA insured loan not only eliminates mortgage payments but allows the borrower to access the equity in their home via monthly installments, a line of credit, or sometimes even a lump sum.  This is a great option for those wishing to age at home, as the loan does not come due until the last borrower passes away or leaves the home permanently.

 

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