Category: Information for Adult Children

What Responsibilities Will A Reverse Mortgage Borrower Have?

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

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

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?

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.

Tips For Adult Children When Considering A Reverse Mortgage With Your Parents

reverse mortgage colorado fort collins loveland greeleyIf you are concerned for your aging parents or relatives as their home becomes too much to manage or too difficult to move about, reverse mortgage may be an option.  It is common for adult children to look into the reverse mortgage process for their parents and help them make the right decision.  Here are some common questions and concerns you may have.

Questions to ponder:

1. Do I have the financial resources to help my parents with their medical and living expenses?
2. Is there a concern from other siblings as to inheriting the home or the equity?
3. What are my parents’ wishes as to staying home if medical care is needed for an extended time?

Common concerns:

  • Will Mom and Dad use up my inheritance?

While tapping into their equity, your parents’ home may be appreciating in value, which could allow for some equity left at the end of the loan. They are also able to live comfortably without having to depend upon family members to support them.

  • Will the bank take their home?

No, the bank will not take their home. Throughout the life of the reverse mortgage, your parents will continue to own their home and retain title.

  • How much money will they owe when the loan has to be repaid?

Your parents will owe the total amount borrowed, accrued mortgage insurance premiums, accumulated interest, servicing fees, and any other costs and fees financed through the loan amount.

  • What happens to the equity if my parents or I decide to repay the loan by selling the house?

There are two options. Either your parents or the heirs can keep the home and pay the balance due on the reverse mortgage, or they can decide to sell the home and use the proceeds to pay off the reverse mortgage. Either way, the remaining equity is retained by the owners or heirs.

  • What happens to my mom and dad’s house if they move into a senior care facility?

A reverse mortgage becomes due and payable when the last borrower moves out of his or her home permanently (12 consecutive months). For instance, moving into a senior care facility, selling the home, passing away or moving in with the children.

  • What happens if the loan balance becomes greater than the value of the home?

The reverse mortgage (aka: Home Equity Conversion Mortgage or HECM) is a FHA insured non-recourse loan, which means that the borrower can never owe more than what the house is worth. As HECM reverse mortgage borrowers, your parents pay a mortgage insurance premium to the U.S. Department of Housing and Urban Development (HUD). They, in turn, guarantee that the borrower will never owe more than the value of their home when the loan becomes due and payable.

  • What are the risks my parents would be taking in receiving a reverse mortgage?

A reverse mortgage doesn’t affect regular Social Security or Medicare benefits. To find out if it impacts other federal or state assistance or medical programs, contact your reverse mortgage lender, tax attorney, or counseling agency.

  • Are there restrictions on how my parents spend their money?

Your parents can spend their money any way they want. Borrowers have used reverse mortgages to pay for grandchildren’s educations, vacations, new cars, home improvements or to eliminate debts. The money can be used for anything they desire.

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, 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.

Can I Sell My Home If I Have A Reverse Mortgage Loan?

reverse mortgage loveland fort collins greeley longmont westminster coloradoFor many that obtain a reverse mortgage, the plan is to stay and age at home, but sometimes reasons come up that the homeowner will want or need to sell the home.  Is this possible if there is a reverse mortgage on the home?  And what does it look like?

Can a home with a reverse mortgage be sold?

Yes, the home can still be sold at any time, just like with a traditional mortgage.  When the home is sold, the borrower will repay the loan balance and any outstanding closing fees from the proceeds of the sale.  Any additional funds from equity will be theirs to keep.

Are there penalties?

No, there are no penalties when selling a home that has a reverse mortgage loan on it.

How are the funds from the sale dispersed?

When the home is sold, repayment of the reverse mortgage loan will be first, followed by any outstanding liens or other obligations, then the homeowner will keep any additional proceeds.

Do I have to notify the reverse mortgage lender of my intent to sell?  

Not necessarily, but it is a good idea to start there and find out what the outstanding balance is.  Having all the facts upfront will help with decision making all around.

Bottom line: Selling a home that has a reverse mortgage loan against it is very similar to selling a home that does not have a reverse mortgage.  As long as you are aware of the few differences, it is a smooth process.

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.  The funds are accessible to the borrower in a variety of ways including monthly installments, line of credit, lump sum, and even a tool to purchase a new home.

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.

 

Gray Divorce Rates Are Climbing – Can Reverse Mortgage Help?

reverse mortgage loveland fort collins greeley longmont coloradoA brand new Pew Research poll highlighted a very interesting trend among divorce in the United States – while divorce rates have drastically declined among younger adults, it’s nearly doubled among adults 50 and over in the past 25 years. 

The truth is, it’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 lasts 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 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 Happens To The Reverse Mortgage After The Borrower Moves Out Or Passes?

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 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.

Should You Use A Reverse Mortgage To Fund In-Home Care?

reverse mortgage loveland fort collins greeley longmont westminster coloradoAccording 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.

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 is a HUD Eligible Home for Reverse Mortgages?

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.

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.