Category: Information for Adult Children

What Is Required Reverse Mortgage Counseling?

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoPrior 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.

Here is what you can expect at your counseling session:

The potential borrower will need to schedule an appointment directly with a counseling agency. The lender does not initiate or take part in the session, but can provide you with resources to seek out a counselor. The session will take place in person or over the phone – although the FHA recommends a face-to-face meeting whenever possible.

Prior to your appointment, the counseling agency will provide you with a packet of information to allow you to prepare for the session. During the session the counselor will discuss your immediate and long-term financial needs, your reasons for seeking out a reverse mortgage, address any questions or concerns you may have, and clearly educate you on the process as well as the pros and cons of a reverse mortgage. Again, they are not there to “sell” you on the product, but to educate instead.

Once you have completed the counseling session, you will be provided with a “Certificate of Completion”. This certificate verifies to your lender that you have completed the counseling session and that you understand the essentials of a reverse mortgage. Your counselor will also follow up with you to ensure you have no further needs, questions, or concerns.

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.

Three Things You Never Knew About A Reverse Mortgage

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoReverse mortgages are available to senior homeowners 62 and over, even married couples.  The borrower will live mortgage payment free and always retain the title to the home.  There are many myths and misconceptions that surround reverse mortgages – but there are also some not-so-known perks to the loans.  

Here are my top three:

1.) Most Reverse Mortgages are Insured By the FHA

It is normal for older adults to be concerned with the welfare of their children after their passing. This is one of the reasons many seniors balk at the idea of a reverse mortgage – they don’t want to “saddle their children with their debt.”  

Fortunately, there are safeguards in place to address this issue.

Almost all reverse mortgage are FHA insured. This means under current guidelines there is a large equity reserve that will always protect their home from going upside down.  Even if the homeowner lives to be 110, has used all the equity in the home, and the market has crashed – the heir will NEVER owe more than the home is worth.  FHA/HUD have guaranteed that they will cover the bank’s losses should the situation arise.  This leaves the homeowner and their estate protected against any possible losses.  

It’s important to also know that on the flip side, if the home is worth more than it sells for after the owners passing, the heirs will receive any excess equity available.  The bank will never take more than what is needed to pay off the loan. 

2.) Reverse Mortgages Have the Option of a Growth Line of Credit

For many years, there were only two ways to tap into home equity when obtaining a reverse mortgage – a lump sum or monthly installments.  This is has changed and HUD has added two new options – a Reverse Mortgage Line of Credit (HECM-LOC) which works similar to a Home Equity Line of Credit (HELOC), with the exception the borrowers will NOT be required to make repayments, and the other option is a Reverse Mortgage for Purchase, which allows seniors to use a reverse mortgage to make a home purchase. 

The line of credit is just as it sounds, it is a line of credit with funds that are available for the homeowner to take when they need it. But the major benefit to this line of credit is it also has a growth factor attached to it. This means that any money left in the line of credit will grow at a rate that is equal to the interest rate and mortgage insurance rates on the loan. 

Here’s an example:

Imagine your HECM-LOC has an interest rate of 4.5% and a mortgage insurance rate of .5%. The combined rate is 5.0%.  You have $100,000 in this line of credit which you don’t plan on using for 15 years unless you need it. That $100,000 is going to grow by 5% annually until you begin accessing those funds.

After year one this line of credit is up to $105,000. After year five the LOC is up to $127,500. And After 15 years the total funds in the line of credit are up to nearly $208,000. In 15 years, that 5% return has grown his available funds by 108%!

3.) A Reverse Mortgage Can Be Used To Purchase A Home

Although the Reverse Mortgage for Purchase program has been around for some years, it’s still relatively unknown – even in the real estate community. 

Reverse mortgages are an excellent option for retirees looking to buy a home near or far.  These loans require a down payment at the time of purchase, but beyond that there are quite a few differences than using a conventional mortgage.  

Borrowers are often able to purchase outside their expected “cash purchase” price range, because the cash is used as a down payment and the remainder of the purchase amount is covered under the reverse mortgage loan, while the borrower lives mortgage payment free.  The borrower will also always retain the title to the home, just as they would with a conventional mortgage.  These loans are also FHA insured, so everything discussed above still applies in that regard. The borrower can own other properties and still qualify as long as the home being purchased is their primary residence.  

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

 

Tips for Selling an Inherited Property

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoSelling an inherited home can be one of the most difficult situations for both realtor and seller. It can be an overwhelming experience, filled with emotion and lots of questions.

While talking about it is hard, it is smart to be prepared. This includes having conversations as a family to determine who will be included in the will to inherit the home, where the deed to the home is kept and where other paperwork is located.

It’s important to remember that each situation is unique, but regardless of the individual situation there are certain ways you can plan.

Here are four tips to help prepare to sell an inherited home:

Work with a Strong Team of Professionals

This is not a task you want to take on alone, and in addition, you want to work with people who are skilled in this area.  This will include a real estate agent, estate lawyer and potentially a tax specialist.

A real estate agent can offer crucial, local market information that is helpful if the heir does not live nearby.

Lawyers and tax specialists can help with important information such as how it will affect the estate and the tax implications the heir may face due to the sale.

Get Organized and Do a Walk Through

Going from room to room and looking at everything from the condition of the floors to how fresh the paint looks can help determine what may need to be done to the home to help it sell quickly.

If the inherited property is older, a home inspection is important before making any decisions as there may be certain systems that need renovations.

Equally important is to gather all of the necessary paperwork such as the deed to the home as well as researching whether there are any mortgages on the inherited property that need to be paid.

Even if the original mortgage was paid off, a reverse mortgage may have been negotiated to help cover expenses. Also look into local property taxes and when they were last paid.

Get the Home Appraised and Price it Correctly

A real estate agent can also provide counsel on an appropriate listing price to match market value. If the heir happens to live out of town, a real estate agent can offer direction to competent inspectors to complete the appraisal, as well as other professionals to assist in the home selling process.

Consider Staging and Cosmetic Improvements

It’s not uncommon for the interior of an inherited property to be outdated.  Staging and making cosmetic improvements can really make a difference in these situations. 

If you’re not sure staging is necessary, ask your real estate agent.  They have a good pulse on similar homes on the market, when you may not. They may also suggest making home design improvements such as repainting rooms and/or landscaping.

Other points to consider are landscaping and the exterior of the home.  Even if the inside is top-notch, don’t make getting them through the front door a challenge.

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

Should Home Equity Be Used In Retirement Planning?

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoDid you know home equity can be used to reduce the overall risk of your retirement plan? Your house is a great asset that for many years has been overlooked in financial planning for seniors. This is making a sharp turn lately as retirement experts are beginning to understand how tapping into home equity via a reverse mortgage should never be underestimated.

Let’s take a look at where most seniors sit currently when it comes to retirement…

• Only 22 percent of workers are very confident they will have enough money in retirement.

• 45 percent of Americans have saved exactly nothing—zero.

• The expected lifespan of women is 20 years past the age of retirement, and two years longer than men.

• The average retiree can expect to spend $220,000 in out of pocket health care costs during retirement.

• Medicare pays for an average of 62% of a seniors health care costs, leaving 38% to come out of pocket.

• 36% of up and coming retirees will rely on Social Security as their sole income.

A reverse mortgage can help in many different ways – and the how the funds are spent is entirely up to the borrower. Whether it’s a monthly payout or a line of credit, when combined with other retirement planning tools, reverse mortgage can allow retirees financial security during the years they worked so hard to enjoy.

Reverse mortgages are available to senior homeowners 62 and over – even married couples. They will live mortgage payment free, always retain the title to the home, and because these loans are FHA insured non-recourse, no one – including heirs – will find themselves saddled with the debt after the owner passes. There are also various solutions for adult children or other family members who may want to keep the home in the family.

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

Everything You Need To Know About A Reverse Mortgage For Purchase

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoWe’re all familiar with the two most common options to purchase a home – take out a mortgage loan or pay cash.  But for seniors 62 and over, there’s another option – the Reverse Mortgage for Purchase program (aka HECM for Purchase).

Looking for a home in Fort Collins, Loveland or Longmont, Colorado but finding it’s a bit out of your price range?  Because the borrower is responsible for only the down payment on the home and will have NO mortgage payments, a Reverse Mortgage for Purchase can help with this too.

What is needed to qualify 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
  • must meet the FHA’s new reverse mortgage credit and income guidelines
  • you must have your “required investment” (down payment) from a HUD allowable source. The funds cannot be borrowed. The required investment can come from the sale of a currently owned home or asset, a gift or inheritance, or money you have had for at least 90 days.

Who owns the home that I am purchasing?

 As the borrower and homeowner, you will always retain the title to the home, just like any other type of home loan.

What will my personal ongoing obligations be after purchasing a home?

It’s very similar to if you owned your home free and clear – you will NOT have a monthly mortgage payment.  But as the homeowner, you will be responsible for paying property taxes, home owner’s insurance, HOA fees when applicable, and basic upkeep including home maintenance and utility payments.

When will the loan become due and payable?

With a Reverse Mortgage for Purchase the loan does not reach “maturity” until:

  • the last remaining borrower passes away
  • the homeowner sells the home
  • the last remaining borrower leaves the home for 12 consecutive months due to illness
  • the homeowner defaults on property taxes or insurance

Will I need to sell my current home residence to qualify?

Simply put, no. As long as the loan on your current residence is not an FHA loan and your required investment comes from a HUD allowable source, you can keep your current residence – but the new home will need to be your primary residence. Your lender will ensure you are financially stable enough to support the ongoing obligations on all properties you own. If you decide to keep your current residence as an investment, rental, or vacation property – or you are awaiting the sale of home, it is rarely a problem.

What types of properties can I purchase?

Single family homes, town homes, and FHA approved condos are all eligible properties. The home being purchased will need to be the buyer’s primary residence.

Can I use the loan to build a new home?

Previously these loans could not be used as construction loans and homes needed a Certificate of Occupancy before the loan application could be started.  This changed this past October, and now homes in construction are eligible.  Read here to learn specifically about obtaining a Reverse Mortgage for Purchase on new construction. 

How is the “Required Investment” amount determined?

The “required investment” or down payment 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
  • The current expected interest rate

What may disqualify me from a Reverse Mortgage for Purchase loan?

  • Foreclosures within the past 3 years.
  • Unresolved bankruptcy
  • Unpaid Federal obligations – i.e. federal taxes, defaults on prior government backed loans (such as student loans or government backed mortgages)
  • Income too low to support multiple properties
  • Unpaid judgments or tax liens

What is the HUD required “Reverse Mortgage Counseling”?

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 third party, 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 is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado, as well as the Cheyenne and Laramie communities of Wyoming.  Contact Jan and learn if reverse mortgage is right for you.

Will My Home Qualify for a Reverse Mortgage

Posted on by janjordan

Reverse Mortgage for Purchase Loveland Fort Collins Greeley Longmont Westminster Colorado Cheyenne Laramie WyomingReverse 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.

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.

What Responsibilities Will A Reverse Mortgage Borrower Have?

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoReverse Mortgages have helped millions of seniors live more plentiful lives as they age.  Homeowners and their spouses over the age of 62 are eligible for Home Equity Conversion Mortgages (HECM), but although they will NOT have a monthly mortgage payment to pay, they are still responsible for some financial obligations regarding the home.  These include:

Property Taxes:

Just as with a conventional home loan, a reverse mortgage homeowner is always responsible for paying their property taxes.  Your particular county or city may have a program that allows you to defer a portion of your property tax.  Homeowners can contact their county human services office for more information.

Homeowners Insurance:

Just as with any conventional home loan, reverse mortgage holders are required to purchase and maintain homeowners insurance.  This yearly expense is something that should be discussed with your lender and a reverse mortgage counselor to ensure the homeowner understands their options and a plan is put in place to keep insurance current.

Home Maintenance: 

The homeowner or their family will be responsible for continuing to maintain and upkeep the home.  Because a reverse mortgage uses the equity available in the home to make it’s monthly mortgage payments, if major repairs are needed the homeowners will not be eligible for a home equity loan or similar.  It’s important to keep this in mind, especially when homeowners elect to receive their reverse mortgage funds in one lump sum.  Again, discussing this with your lender can help ensure you have planned to have funds available should a major home repair be needed.

Ultimately, understanding and planning for these expenses is key to being prepared in the years to come.  Working with and asking questions of a reputable reverse mortgage lender, as well as a reverse mortgage counselor, can help alleviate any concerns a homeowner may have.

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.

Tips for Adults with Aging Parents

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoWith the holidays behind us, it’s not uncommon for adult children to reach out to me to discuss a reverse mortgage as an option to help their aging parents.  They often spend a little more time with family and may realize things are changing with their parents and in their home.  Here are my tips to helping your parents or older loved ones…

1.) Talk with them

Don’t hide your concerns or exclude them from the conversation, no matter how uncomfortable it is.  Ask them to sit with you and discuss your concerns.  Discuss their wants and needs.  Learn about their financial situation and retirement resources.  Having a honest face to face conversation is the first step to determining what is best for them.  

2.) Discuss living arrangements 

Find out what your parents want to do long term regarding their home.  Discuss what they ultimately want, and what would make them change their mind.  According to AARP, 90% of retirees want to age at home.  Do they have concerns with their home?  Do they need updates?  Is the home too big?  Too many stairs?  Do they want to move to a smaller home?  If medical care became a need, how will this be managed?

3.) Look into the various options such as insurance and reverse mortgage

When discussing how to finance potential scenarios, educating yourself about the various options such as long term care insurance and reverse mortgages will go a long way.  The two can even be used together by using some of the reverse mortgage funds to pay for long term care insurance, especially when there are medical concerns.  

4.) Come to an agreement about how much is expected out of adult children

Adult children may want to give the world to their parents, but is that really feasible?  And how do the parents feel about that?  Determining expectations all around, along with setting hard boundaries, will ease any resentment down the road.

5.) Seek out a professional

There are many resources for seniors – whether it’s community resources or elder attorneys.  When you’re unsure of the options or what is best, enlisting a professional can help to ease everyone’s mind. 

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

A Look At Data and Housing Desires of Retirees

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoIf you find yourself yearning for a retirement of comfort in your own home in a community you love, you are definitely not alone.  Here are some pretty telling facts and statistics surrounding the desires of older adults in the U.S..

According to research by the American Association of Retired Persons (AARP):

  • Nearly 90 percent of seniors want to stay in their own homes as they age.
  • Even if they begin to need day-to-day assistance or ongoing health care during retirement, 82% would prefer to stay in their homes.
  • Most pre-retirees expect they will be able to live independently during retirement; only 14% expect they will need day-to-day assistance or ongoing health care at any point during their retirement.
  • Thinking about parents’ getting older is on the minds of 88% of adult children.
  •  75% of adult children and 69 % of parents think about the parents’ ability to live independently as they get older

  •  AARP identified housing features that seniors find are especially important in the later years: 

    – Safety features such as non-slip floor surfaces (80 percent)

    – Bathroom aides such as grab bars (79 percent)

    – A personal alert system that allows people to call for help in emergencies (79 percent)

    – Entrance without steps (77 percent)

    – Wider doorways (65 percent)

    – Lever-handled doorknobs (54 percent)

    – Higher electrical outlets (46 percent)

    – Lower electrical switches (38 percent)

From the National Assocation of Home Builders:

  • 75% of remodelers report an increase in inquiries related to aging in place.
  • The NAHB predicts that aging in place remodeling market to be $20-$25 billion.  That’s about 10 percent of the $214 billion home improvement industry.

According to the MetLife Mature Marketing Institute:

  • 91% of pre-retirees age 50 to 65 responded that they want to live in their own homes in retirement.  Of that group, 49% want to stay in their current homes, and 38% want to move to new homes

Whether it’s the desire to simply stay put through retirement, or to make modifications to the home, or even to purchase a new home, a reverse mortgage is a flexible tool to help finance any of these.  

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

Should You Stay Put During Retirement?

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoRetirement has evolved over the past few decades.  At one time it was assumed you’d live with your adult children or in a senior home as you age.  At another time, dreams of moving far away to warmer climates and lush golf courses was the trend.  And now, the preference is staying at home and aging in place.  

According to American Association of Retired Persons (AARP), 90 percent of retirees now say they want to age in place, with 82% of them reporting they prefer in home care if medical assistance becomes necessary. 

So how do you know if staying put during retirement is right for you?

1.)  You have established professional, social and family networks 

Strong social networks is critical to a happy retirement.  Professional networks from working or volunteer networks from performing acts of service can help to decrease boredom and boost moods.  Social networks help physically, mentally, and emotionally.  An established circle of friends, as well as nearby family, has been proven to lend to a successful and content retirement.  Moving away from children, grandchildren, and even great grandchildren can be very difficult for many. 

2.) You have important service providers established

Important service providers include everything from doctors and dentists, to financial planners and attorneys, to mechanics. In the case of chronic or serious conditions, staying put may be out of necessity to remain near medical providers or in home me

3.) It’s difficult to sell the home

Although Colorado has seen a boom in the housing market, there are still some areas where selling the home may be a difficult option.  Or for personal reasons, you simply don’t want to. 

Reverse mortgages have been making it possible to age in place for years now.  These specialized loans 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 is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado, as well as the Cheyenne and Laramie communities of Wyoming.  Contact Jan and learn if reverse mortgage is right for you.