Author: janjordan

Reverse Mortgage and Your Taxes

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reverse mortgage loveland colorado fort collins longmont greeley boulderThere are many differences between a reverse mortgage and a traditional mortgage – and taxes are a big one.  Here’s a run down of what to expect come tax time if you have a reverse mortgage.

 

The Tax Liability Issue

 

Because any funds you receive from a reverse mortgage are essentially an advance on your home equity – equity you already own and have paid for, the IRS does not consider money received from a reverse mortgage income, they consider it an advance, therefore it is not taxed as income.  This is the case regardless of how you receive the funds – whether monthly installments, a line of credit, or a lump sum, you will never pay income tax on this.

 

What About Deductions on Interest?

 

Here’s one situation where there is a stark difference between a traditional mortgage and a reverse mortgage.  With a traditional mortgage interest and fees paid are tax deductible every year they are paid.  This is still the case with a reverse mortgage, except in the scenario of a reverse mortgage the interest is not paid until the loan comes due, therefore it cannot be claimed as a deduction until this point.  The loan comes due if the borrowers sells the home, passes away, or permanently leaves the home.

 

Property Taxes

 

With a traditional mortgage, property taxes are often taken care of by an escrow service.  With a reverse mortgage the homeowner is 100% responsible for making these property taxes are kept up to date.  If there are financial concerns about the ongoing cost of property taxes, discuss this with your reverse mortgage specialist.  In the new financial assessment there are options to help set aside a portion of the funds to cover ongoing expenses such as property taxes and homeowner’s insurance.

 

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

Another Reason Why I Love Loveland, Colorado

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reverse mortgage loveland fort collins greeley longmont westminster coloradoLoveland, Colorado is amazing for many reasons.  While it sits right in the heart of Northern Colorado, with easy access to many surrounding bustling cities, it’s an incredibly low key town.  The people are great, the community truly cares, and of course, it’s a haven for love and has been for 70 years.  There’s a reason Loveland is called the sweetheart city, and goes beyond just the name.

 

2016 marks the 70th anniversary of Loveland’s Sweetheart Valentines program.  Here’s the “sweet” story from the Loveland Reporter Herald:

 

Wilma Davis and Paul Wallace waited 12 years to join the ranks of Loveland Valentine Remailing Program stampers, while Delaine Phillips, Joan Williams and Janice Gibbs have been volunteering a collective 75 years.

All five, and several dozen more, braved cold weather, falling snow and travel warnings Monday to kick off the 70th remailing program — an effort by which more than 150,000 valentines are stamped with a special Sweetheart City design and postal cancellation, and then re-sent to destinations around the world.

“You touch lives all over the world, 50 states and 110 countries,” Mindy McCloughan, president of the Loveland Chamber of Commerce said to the volunteers, who will stamp through Feb. 12.

“People are depending on you, snow, sleet, rain and hail. You have snow boots, will travel, right?”

New to the table

Volunteers often do not leave the volunteer remailing program, so future stampers can spend years on the waiting list, which is currently 70 names long.

Wilma Davis first signed herself and her “bestest buddy” Paul Wallace up 12 years ago. She was delighted, about two weeks ago, to get the call that 2016 would be their first year as Loveland valentine stampers.

“We finally made it,” she said. “It was on my bucket list.”

Both she and Wallace practiced several times with black and red ink to make sure their stamps were just so, then dove right in with the other volunteers.

“I think it is just awesome,” said Davis. “The camaraderie is great.”

Wallace and Davis met each other growing up in Kansas when she was 10 and he 11, and were friends all through school before their lives took different directions and they lost touch. Both married and had happy lives, each raising four children.

They reconnected as friends years later, and after both of their spouses died, began communicating by email. The friendship rekindled, and 16 years ago Wallace moved to Loveland. He and Davis are now best friends who travel and volunteer together.

And now, after 12 years of waiting, the friends sat side by side Monday and hand-stamped valentines that will make their way around the country, and perhaps, the world.

Veteran stampers

“I had a friend who was stamping,” Delaine Phillips said. “She came by the house one day and said come with me.”

That is how it all began. She has been stamping valentines for the Loveland Chamber of Commerce for 27 years. When she started, the volunteers worked in the old post office. There was no waiting list, no room full of volunteers, just two rows of tables and a sorting table.

Delaine was joined a few years later by Joan Williams, a 25-year veteran, and Janice Gibbs, a 23-year veteran. The three have been team ever since. They work at a separate table that deals with unusual mail, pieces that are too bulky, specially decorated or with some other issue.

“We wanted to be the Andrews Sisters,” Williams said.

The three have been through a few different labels, The Trouble Shooters, The Three Amigos and most recently, The Three Musketeers.

“We have a lot of people who are very creative,” said Williams. They have seen their fair share of unusual mail with everything from glued-on macaroni to lace and frills. They repackage it, if need be, and make sure it still gets a Loveland stamp or sticker, no matter what is on the outside.

“We try to come up with ways to see most of the stamp without covering up the pictures,” Phillips said as she discussed how they will cut apart the stamps to accommodate the card.

“Remember the obscene postcards?” Gibbs asked as the ladies reminisced about the most memorable valentines they had seen. The postcards were discreetly repackaged and returned to sender.

The waiting list to be a volunteer is a long one, with people waiting to be part of the dances, theme days and good times. Much like the unique valentines they’ve seen, they trio has been lucky to meet many unique volunteers.

“We’ve seen them come and go,” Gibbs said. “That’s the hardest part.”

Story by Pamela Johnson

 

Click here to view the article on the Reporter Herald website.

 

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

 

Divorcing After Retirement? Reverse Mortgage Can Help

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reverse mortgage loveland fort collins greeley longmont coloradoIt’s becoming more and more common for seniors to divorce after retirement.  This is happening for various reasons, but a big one is that retirement now last for decades versus only years, and many people are looking to make those golden years the best yet.

 

But senior divorces can get messy, as there are often many assets to sort out.  During divorce negotiations, a home is often one of these assets.  This home is possibly owned free and clear, or with a lot of equity.  For divorcees age 62 and over, a reverse mortgage can be used as a tool to help with settling this asset during divorce.  The great thing about reverse mortgage is it allows someone to stay in the home and live mortgage payment free, AND access funds from the equity.  Here are a couple scenarios in which reverse mortgage would be of benefit.

 

Scenario 1: When splitting the home asset, instead of selling the home, one party could be allowed to stay in the home and obtain a reverse mortgage, of which the other party receives the funds from.  This can be a win-win.  In cases like this, the financial settlement can even be wrapped into the loan if the divorce is final before the closing.  This would mean a reverse mortgage would be part of the divorce settlement discussion.  It is important to understand that the party that remains in the home will be responsible for certain obligations pertaining to the home, such as property taxes and homeowners insurance.

 

Scenario 2: Possibly you’re used to living off two incomes – whether it be from work, or social security and pensions.  Suddenly dropping down to one income can be devastating.  In cases like this getting the home in divorce proceedings can be a huge benefit, as once the divorce is final, a reverse mortgage could be obtained on the home.  The funds could come in monthly installments, a line of credit (that grows), or a lump sum.  In addition, if you wanted to sell the home and move, a reverse mortgage could be used to purchase the new home – and can even allow you seek homes that would otherwise not be in your price range.  The best part?  You will always live mortgage payment free.

 

If you are considering a divorce, or sifting through the process, don’t hesitate to contact me to further understand how reverse mortgage can help, and whether or not you qualify.

 

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

 

Nursing Home vs Reverse Mortgage

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reverse mortgage colorado fort collins loveland greeleyIn our society, the elderly and nursing homes go hand in hand.  But when speaking with elderly people, one of their biggest fears is being placed into a nursing home.  Who can blame them?  According to National Center on Elder abuse, one study interviewing 2,000 nursing home residents reported that 44% said they had been abused and 95% said they had been neglected or seen another resident neglected.  When considering the psyche of an older senior, nursing homes or convalescent homes mean “end of life”.   Often times adult children don’t know a better solution as the needs of the parents increase, the home is no longer suited for their parent, and/or they do not have the funds or the time for in home care.   Reverse mortgages have been helping seniors in need for years.  But now as retirement planners are realizing the benefit the can offer long term, they are now being used more proactively.

 

Reverse mortgage is a great method to finance in-home care to avoid nursing homes, pay for medical care, and even fund home modifications.  For seniors who are looking to situate long term and prepare to live their golden years in their own home, a move to a new residence closer to family or more suited for senior life may be in order.  The reverse mortgage for purchase is perfect option for these situations.  Reverse mortgage for purchase allows the purchase of a different residence using a reverse mortgage while still employing the perks of a traditional reverse mortgage – living mortgage payment free.  In addition, reverse mortgages do not affect social security, pensions, or medicare.

 

Both reverse mortgage for purchase and traditional reverse mortgage are available to seniors 62 and over.  The home must be the primary residence and it must be a HUD approved property type.

 

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

Reflecting on the Holidays and Elderly Family

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reverse mortgage colorado fort collins loveland berthoud greeley windsorWith Christmas now behind us, many families are reflecting on the holiday.  Adult children enjoyed spending time with their aging parents or relatives, grand children and great-grand children were squeezed and showered with adoration.  For some spending time with family is an encouraging sign of many happy years to come…but for others, it can be a time that raises concern about health or finances, and questions about how aging  parents will continue to cope.  Will this person need additional care?  Do they need a more adequate home closer to family or suitable for aging in place?  How does long term retirement look?

 

Concerns such as this are very common around the holidays.  To better guide you in the right direction and ultimately direct the family in the right direction, here are some questions to ask yourself:
• Are they able to get around by him or herself? Are there stairs in the home?

 

• Is this person able to take medications without assistance? Is there a health concern that would require more regular supervision, such as Alzheimer’s or Parkinson’s?
• Is your parent able to manage mortgage payments, home-owners insurance payments, and property taxes. Is the home outdated and in need of frequent repairs – such as a furnace, roofing, electricity?

 

• Where is this home located? Is it in close proximity to relatives, hospitals, etc? Or is it secluded and away from town?

 

• Is this person lonely? Has he or she suffered the loss of a spouse? Does he or she have a solid social group or close friends?
Based on your answers to these questions, aging at home may be an option for years to come – and reverse mortgage can be a solution to many problems even for married couples. Reverse mortgages allow homeowners age 62 and older to access equity in their home, without acquiring a loan or mortgage payment, and the funds can be accessed via a line of credit, monthly installments, a lump sum, and even as a new home purchase. The homeowner will always retain the title and remains in the home. All reverse mortgages are government insured with an FHA backed loan and no repayment is due until the last borrower passes away or permanently leaves the home. At that time there are several options that include keeping the home in the family. If selling the current residence and moving into a new home is a more reasonable route, Reverse Mortgage for Purchase may be an option.

 

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

Tackling Senior Identity Theft

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Jan Jordan Reverse Mortgage Identity Theft ColoradoWhat is Identity Theft?

 

According to the 1998 Identity Theft and Assumption Deterrence Act identity theft is when someone “knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, any unlawful activity that constitutes a violation of federal law, or that constitutes a felony under any applicable state or local law.”

 

The three most common types of identity theft are:

  • Financial identity theft (using another’s identity to obtain credit, goods and services)
  • Identity cloning (using another’s information to assume his or her identity in daily life)
  • Medical identity theft (using another’s identity to obtain medical care or drugs)

How does Identity Theft happen?

 

In today’s technology driven society, protecting your identity is more important than ever.  But don’t assume identity theft only happens online.  It can happen anywhere, anytime.  Someone could be watching over your shoulder as you fill out a form at your doctor’s office.  Another individual could be rummaging through your trash, hoping to find a tossed out credit card offer.  Your email program’s spam filter may not be blocking those emails from Phishing websites.  There are many ways to fall victim to identity theft, arming yourself with facts and prevention is key to protection.

 

How do I protect myself from Identity Theft?

  • Be aware of your surroundings.  When filling out forms that include private information, take a seat away from others when possible. Never throw out forms or paperwork that may have your personal information on them, always take these home with you and dispose of them properly.
  • Don’t toss out credit card offers or other junk mail that pertains to obtaining credit.  In addition, any other private information you have – bills, car registration, insurance documents, bank statements – should always be disposed of properly and NEVER put out with your household trash.  These items should be shredded or burned.  In addition, limiting the amount of junk mail you receive by “opting out” of mail distribution lists can vastly decrease your risk.  Opt out by calling 1-888-5-OPTOUT.
  • Never follow links to bank accounts, credit accounts, PayPal accounts, etc from an email.  “Phishing” emails may appear as a completely legitimate email from your bank or credit card company, warning you of unauthorized transactions or other alarming information.  These emails will include links that take you to a website that looks identical to your bank’s – but it’s not.  Once you enter your information into this “Phishing” site, you have given some of your most valuable financial information to a con-artist.  ALWAYS access your bank and credit accounts by entering their web address into your web browser, NEVER through a link.  Reputable companies will not contact you via email about such important matters.
  • Don’t respond to emails offering money in exchange for “helping” an individual transfer money into the country.  These are always scams and have proven to be very dangerous.
  • Password protect your computer and your wireless internet. Use firewalls and virus protection software.
  • Never give personal information to telephone solicitors or door to door solicitors.  Do not give out personal information over the phone unless you placed the call yourself.
  • Lock your car.  Identity theft via “glove compartment” information is on the rise.  Keeping your car locked can ensure you are not an easy target.
  • Don’t carry your Social Security card in your wallet or purse.  Purge expired credit cards, insurance cards, and ID’s regularly.  Keep these items at home in a safe place.
  • If you do not have a locking mailbox, do not mail payments using your mailbox.  Always take the mail directly to the post office.

 

What do I do if think I’ve been targeted?

 

Contact the Federal Trade Commission at 1-877-IDTHEFT or www.ftc.gov

 

 

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

What is an FHA Insured Reverse Mortgage Loan?

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reverse mortgage loveland fort collins greeley longmont westminster coloradoIf you’ve taken the time to learn even a little bit about a reverse mortgage, it’s likely you’ve heard the term “FHA insured” at least a couple of times.  But what exactly does it mean?

Homeowners 62 and over, with significant equity in their home, may be eligible for a reverse mortgage.  These loans are typically insured by the FHA and provide non-taxable income to the borrowers based on the available equity in the home.  The more equity and the older the borrower, the more funds available.  The funds can be accessed via a line of credit, monthly installments, a lump sum, and even can be wrapped into the purchase of a new home.  The borrower can always use the funds for whatever they deem fit.

The homeowner will live mortgage payment free for as long as they remain in the home, although they will have a few financial obligations related to the house such as homeowners insurance, property taxes, utilities, and HOA fees.  As long as the borrowers keeps current on these few obligations, they cannot be evicted from the home or made to repay the loan.  The loan comes due once the last borrower has left the home for 12 consecutive months or passes away.  At this time the loan will be due and payable with time allotted to allow for transitions.  This is where the FHA insurance comes in.

In the case of a death, the home with pass onto the heirs.  At this time they have two options – 1) Pay off the loan and keep the home (often through life insurance or sale of another asset), or 2) Sell the home.

In the scenario of loan repayment the heirs will never have to repay any more than the home is appraised for.  They will only be required to pay 95% of the appraised home value or the full amount of the loan, whichever is less.  Any amount due on the loan above the appraised amount will be covered by the FHA insurance and no one will be held liable.

In the case of a home sale, the heirs will never be required to pay more on the loan than the home sells for as long as the sale price is at least 95% of the appraised value.  Any remaining balance will be covered by the FHA insurance.  On the other hand, if the home sells for more than the loan balance, the heirs will keep any remaining funds.   This is especially important as over the years the housing market shifts.

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

Can a Reverse Mortgage Provide Financial Security for Life?

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Reverse Mortgage Loveland Fort Collins ColoradoThe reverse mortgage of today is NOT your mother’s reverse mortgage.  The once shamed program is now helping seniors from all different walks of life fill retirement gaps and provide protection and stability through their golden years. Financial advisers and retirement planners are beginning to incorporate a reverse mortgage into retirement portfolios at the beginning of retirement, rather than using them as an emergency life line once the “nest egg” has been exhausted.

Through the use of a strategic FHA insured reverse mortgage, retired homeowners are able to use the equity in their homes as an available line of credit for life – without being required to make a monthly mortgage or loan payment.  That’s right – a reverse mortgage CAN provide Colorado’s seniors with guaranteed cash flow for life – as long as they continue to live in the home and keep their property taxes, homeowners insurance, and HOA fees up to date.  The funds can be used for whatever the borrower deems fit – additional income, medical expenses, vacations, home repairs or modifications, gifts, etc.

Reverse mortgages are available to homeowners 62 and over, including married couples with many protections in place to ensure borrowers are adequately educated before using this option, such as required third-party counseling, reverse mortgages are gaining in popularity among retirees from all walks of life.  A reverse mortgage for purchase option is available for those looking to purchase a new residence.

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

Six Ways to Use a Reverse Mortgage to Protect Retirement Income

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reverse mortgage loveland fort collins greeley longmont westminster colorado
Wade Pfau, Ph.D., CFA

Reverse mortgages have long been shunned by many financial professionals, often thought of as a lifeline for desperate and broke seniors.  This thinking wasn’t misplaced.  Reverse mortgages were often often only used for these type of scenarios.  But as retirement planners are facing the harsh reality of slower than anticipated growth in investments and a stagnant economy, they are fast beginning to understand how under-utilized home equity and reverse mortgages have been – and how they can be the missing puzzle piece for so many of their clients.

In some latest research, Wade Pfau, a professor of retirement income at the American College of Financial Services, examined six ways to use a reverse mortgage as part of retirement-income plan.

Here are those six strategies:

  • Use home equity first: With this strategy, you’d open a line of credit at the start of retirement, and use this line to pay for all your retirement expenses until the line of credit was fully used up. This allows more time for the investment portfolio to grow before being used for withdrawals after the line of credit is depleted, wrote Pfau.
  • Use home equity last: Here, you’d open a line a credit at the start of retirement and only use it after your investment portfolio was depleted.
  • The Sacks and Sacks Coordination Strategy: With this strategy, you’d open a line of credit at the start of retirement, and use the line of credit, when available, following any years in which the investment portfolio experienced a negative market return, wrote Pfau. No efforts are made to repay the loan balance until the loan becomes due at the end of retirement, he wrote.
  • The Texas Tech Coordination Strategy: This method is a bit more complicated. With this one, you’d open a line of credit at the start of retirement and then each year you’d analyze whether you can keep withdrawing money from your investment portfolio at the desired rate over a 41-year time horizon. If the remaining portfolio balance is less than 80% of the required wealth you’d tap the line of credit, when possible. And if the portfolio balances is greater than 80%, you’d pay down provided your portfolio did not fall below the 80% threshold the balance on the reverse mortgage balance. This, Pfau wrote, would provide more growth potential for the line of credit.
  • Use tenure payment: Here you’d open a line of credit at the start of retirement and a receive a fixed monthly payment for as long as the borrower is alive and lives in the house. And spending needs over and above that reverse mortgage payment would be covered by the investment portfolio when possible, Pfau wrote.
  • • Ignore home equity: This strategy makes no use of home equity, and Pfau only examines it to show the probability of a retirement-income plan succeeding when home equity isn’t used.

So what did Pfau find?

Generally, strategies which spend the home equity more quickly increase the overall risk for the retirement plan, he wrote. More upside potential is generated by delaying the need to take distributions from investments, but more downside risk is created because the home equity is used quickly without necessarily being compensated by sufficiently high market returns.

Meanwhile, he wrote, opening the line of credit and that start of retirement and then delaying its use until the portfolio is depleted creates the most downside protection for the retirement-income plan.

Reverse mortgages are available to seniors 62 and over as long as the home the loan is being used against is the primary residence and there is some equity available.

Get Your Dream Home with Reverse Mortgage for Purchase

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Jan Jordan Blog : Reverse Mortgage Loveland Fort Collins Greeley Longmont ColoradoWhen we’re working hard and raising a family, there are two things we often hope to achieve in our future – having no house payments and living in our dream home.  Then as the years close in on retirement, these may still seem unachievable – but they’re not.  With the Reverse Mortgage for Purchase program seniors 62 and over can live mortgage payment free in the home of their dreams.

Here’s how it works:

When a home buyer uses a reverse mortgage to purchase a home, they will be required to provide a down payment.  The amount of the down payment will depend on the amount of the home they are purchasing – but unlike a conventional loan, not only will the lender provide the funds to make up the difference between the home price and the down payment, the new home owners will also be able to live mortgage payment free for as long as they remain in the home, freeing up income for other things – such as medical bills, in home care, or even vacations.

Commonly when someone has a large amount of cash they want to simply pay cash for a home.  But in today’s housing market, even $200,000 doesn’t go very far.  With a reverse mortgage for purchase that $200,000 can be used as a down payment on a much more expensive and desirable home – AND the buyer will still live mortgage payment free, just as if they’d paid for the home with cash.  As with any reverse mortgage or conventional mortgage, the homeowner will always remain exactly that – the homeowner.  And the loan will not reach maturity until the last borrower passes away or permanently leaves the home.

Click here for more detailed information about how the Reverse Mortgage for Purchase program works.