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Category: Information for Adult Children

A Look At How Reverse Mortgages Have Evolved

Posted on October 4, 2023 by janjordan

Since the reverse mortgage industry saw big changes in 2015 then again in 2017, financial advisers, retirement planners, and reverse mortgage specialists are collaborating more than ever before. In an effort to ensure these changes are are thoroughly understood and appropriate solutions are offered to clients, a strong relationship between professionals is vitally important.

Because of these newly developed relationships, it appears a wonderful shift is taking place. Reverse mortgage, once stereotyped as a product for poverty stricken widows or the like, is now being realized as a product of opportunity. More and more we’re seeing affluent and middle class retirees utilizing this option to provide financial stability and financial freedom throughout retirement. The industry has only begun to scratch the surface of those who would benefit or will discover the possibilities when tying a reverse mortgage into their retirement plans.

This paradigm shift will likely increase knowledge across the board regarding both traditional reverse mortgage loans and the reverse mortgage for purchase program. Both products are available for seniors 62 and over.

If you have any questions regarding the changes that have taken place surrounding the reverse mortgage industry in Colorado, please don’t hesitate to contact me.

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 to learn if reverse mortgage is right for you.

Reverse Mortgages: When The Homeowner Passes Away

Posted on September 22, 2023October 4, 2023 by janjordan

A 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.

Think You’re Too Old For A Reverse Mortgage? Think Again.

Posted on August 4, 2023August 28, 2023 by janjordan

The minimum age for a reverse mortgage loan is 62, but what about a maximum age? Is anyone ever too old for a reverse mortgage? I don’t think so, although it won’t be right for everyone.

Reverse mortgages are available to homeowners, or those seeking to purchase a home, who are 62 and older, including married couples. There are NO loan or mortgage payment requirements while living in the home, but they are responsible for continuing to pay property taxes, homeowners insurance, and any other associated costs such as HOA fees and utilities. The loan becomes due when the last borrower passes away or permanently leaves the home (for 12 consecutive months).

Common reasons for seeking out a reverse mortgage include boosting retirement income, strategically protecting retirement assets or delaying the use of them, medical care, or simply to have a safety net. The creative uses for reverse mortgages go full circle. But what about the very elderly? How can it help them?

I once worked with a 100 year old man to obtain a reverse mortgage on his home and fund in-home care while he continued to age. He was able to reside at home with 24 hour care at a cost of $10,000 a month. When I was sitting at the closing table with this 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.” And he did. And I was honored to have helped him be able to do that.

Another example would be if a parent-adult child duo were living together as they both age. In many of these cases, it’s common both are age eligible to be on the loan. And why shouldn’t they be?

Sometimes the elderly want to live out the final years of their life by sharing time and gifts with those they love. Why not offer inheritance while you’re here and can enjoy watching those you love reap the rewards of it?

Whatever the reason, reverse mortgage may be the answer, no matter how old the borrower is.

One concern that can arise is whether or not the elderly can pass the financial assessment needed to obtain the reverse mortgage loan, since they likely have limited income by this point. But older borrowers can tap a larger percentage of their home’s equity, allowing for a potential set-aside of funds to cover required expenses. The reason is that their life expectancy is shorter, meaning the expected term of their loan will be shorter, too.

Don’t Fall Victim To Reverse Mortgage Scams

Posted on July 28, 2023August 28, 2023 by janjordan

You may hear about email scams, telephone scams, door-to-door soliciting scams – but what about reverse mortgage scams? Unfortunately just as we have scams in every segment of society and at every opportunity, reverse mortgages and seniors are not immune to such activity.

In the past decade, reverse mortgages also known as Home Equity Conversion Mortgages (HCEM), have increased more than 1,300 percent! This certainly offers an astounding opportunity for fraud perpetrators.

What do reverse mortgage scams look like?

Victims may be offered a free home, an investment opportunity, or foreclosure and refinance assistance. Senior citizens are often unsuspecting targets for scammers, as they are not familiar with the multitude of unscrupulous and dishonest “programs” that exist. Scammers reach their victims often through churches, investment seminars, television, radio, billboard, and mailer advertisements.

When considering a reverse mortgage product, it is very important to research the company. Most reverse mortgages are insured by the Federal Housing Authority (FHA). Seek out companies that are a member of the Better Business Bureau and associated with the National Reverse Mortgage Lenders Association.

Tips for Avoiding Reverse Mortgage Scams:

• Do not respond to unsolicited advertisements.
• Be suspicious of anyone claiming that you can own a home with no down payment.
• Do not sign anything that you do not fully understand.
• Do not accept payment from individuals for a home you did not purchase.
• Seek out your own reverse mortgage counselor.

What To Know About Reverse Mortgages With Social Security, Medicare & Pension

Posted on June 13, 2023July 5, 2023 by janjordan

A very common concern among seniors and adult children when considering a reverse mortgage is how it will affect social security, medicare, and even certain pensions. For many seniors, these benefits are a large part of their income. Fortunately, because the funds from a reverse mortgage are NOT considered taxable income, a borrower’s benefits will not be affected when taking out a reverse mortgage.

On the other hand, borrowers who have Medicaid, TANF, Food Stamps or SSI may see those benefits affected by this additional income. Because these programs are government sponsored programs with strict approval guidelines based on all sources of income, even non-taxable income, there is a possibility the additional cash flow will need reported. Other supplemental and assistance programs would need to be addressed on a case by case basis. Working with a reputable reverse mortgage lender and required third party counseling will ensure all your questions are answered thoroughly and honestly.

Reverse mortgages are available to homeowners 62 and older. The proceeds can be received as a lump sum, as monthly installments, or a reverse line of credit and can be used for any purpose the borrower sees fit. This FHA insured loan allows the borrower(s) to live mortgage payment free.

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

Reverse Mortgage Counseling: What To Expect

Posted on June 6, 2023July 5, 2023 by janjordan

Prior to being approved for a reverse mortgage, HUD’s Federal Housing Administration (FHA) requires each borrow to participate in a counseling session with an approved agency. These not-for-profit agencies are funded by the federal government and work closely with both the FHA and lenders to ensure a smooth process.

The goal of this session is not to steer a potential borrower in one direction or another, but to make sure they clearly understand all aspects of a reverse mortgage.

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.

Here’s Where To Start If You’re Considering A Reverse Mortgage

Posted on May 30, 2023June 5, 2023 by janjordan

reverse mortgage loveland fort collins greeley longmont westminster colorado Every month thousands of Americans make a decision to obtain a reverse mortgage, but where do they start? Here are my suggestions to begin the reverse mortgage process, as well as an outline of what to expect.

Research: Begin by researching reverse mortgages to understand how they work, their benefits, and potential drawbacks. Educate yourself on the eligibility criteria, loan types, repayment requirements, and any associated costs. This will help you make an informed decision.
Consult with Professionals: Consider consulting with a financial advisor or an elder law attorney who can review your financial situation and provide personalized advice. They can help you assess whether a reverse mortgage aligns with your long-term financial goals and explore any legal or tax implications.
Find Lenders: Identify reputable lenders who offer reverse mortgages. Look for those approved by the Federal Housing Administration (FHA) or other relevant regulatory bodies. Compare lenders based on their reputation, ties to the community, information, and customer reviews. It’s advisable to select a lender with specific experience in reverse mortgages.
Gather Information: Once you’ve chosen potential lenders, contact them to request information and application materials. They will provide you with details about their specific reverse mortgage products, requirements, and the application process. The reverse mortgage professional you choose should be easy to get a hold of, knowledgeable, and able to answer any and all questions.
Seek Counseling: Counseling is a mandatory step in the process and is designed to provide you with unbiased information and guidance. The counselor will evaluate your financial situation, discuss alternatives, and help you determine if a reverse mortgage is the right choice for you.
Application Process: Begin the application process with your chosen reverse mortgage professional and lender. You will need to provide various documents, including identification, proof of homeownership, income verification, and information about outstanding mortgages or liens on the property. The lender will guide you through the specific documentation requirements.
Home Appraisal: The lender will arrange for a professional appraisal of your home to determine its current market value. This step is necessary to calculate the maximum loan amount you may be eligible for.
Loan Approval and Closing: After reviewing your application, financial assessment, and appraisal report, the lender will decide whether to approve the loan. If approved, you will proceed to the closing process. During closing, you’ll sign the necessary documents, including the loan agreement and any other legal paperwork.

Remember to take your time, ask questions, and carefully review all the details before proceeding. It’s important to fully understand the terms and conditions of the reverse mortgage before making a decision.

Reverse mortgages are available to homeowners 62 and over, including married couples. 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.

Looking For A Reverse Mortgage Professional? Here’s Some Differences

Posted on May 23, 2023June 5, 2023 by janjordan

When you start navigating the waters of reverse mortgages, you will undoubtedly come across MANY different companies and individuals ready and willing to help. Flashy ads, website calculators, famous spokesmen, and more. But who are all these people? And what is the difference between them? How do you know what is the best fit for YOU?

Here’s some information I think anyone considering a reverse mortgage needs to know about the various professionals who work in the industry:

Banks and Credit Unions – Most local banks and credit unions do not offer reverse mortgage loans, although sometimes the larger ones will. Unfortunately seeking a loan through them can often mean little or no face-to-face time, and it’s not uncommon for these banks to leave the industry down the road. At one time Wells Fargo and Bank of America were in the business, but they quit, leaving their borrowers with loans that few employees can understand and little help if reverse mortgage customers need it.

Brokers – A reverse mortgage broker is a third party individual that is licensed by the state but doesn’t work directly with a lender, instead they essentially shop the marketplace. When working with a broker, borrowers will pay higher fees because they will have to cover the costs of the broker. In addition, because all transactions run through a third party, things can easily get slowed down or even stalled completely.

Direct Lender Specialists – This is the category I fall into. Working directly with a lender that specializes in FHA insured HECM reverse mortgages, such as Mutual of Omaha, direct lender specialists are able to offer local, personal, face-to-face time with clients, and eliminate the need for costly third-party fees. We are able to do all this while ensuring the smoothest, most efficient transaction possible because they are handling the loan and not farming it out to another company.

Reverse mortgages are available to individuals and married couples age 62 and older. These FHA insured loans allow homeowners to live mortgage and loan payment free until they pass away, permanently leave the home (meaning 12 consecutive months), or they default on financial responsibilities associated with the home, such as property taxes or homeowner’s insurance. The funds are available via monthly installments, a line of credit, a lump sum, or even to purchase a home.

Everything You Need To Know About The Reverse Mortgage Line of Credit

Posted on May 16, 2023June 5, 2023 by janjordan

A reverse mortgage line of credit is a financial product designed for homeowners who are at least 62 years old and have significant equity in their homes. It allows them to access a portion of their home’s value without having to sell the property or make monthly mortgage payments.

Here’s how a reverse mortgage line of credit typically works:

Eligibility: To qualify for a reverse mortgage line of credit, you must meet certain criteria, including age requirements and home equity. You need to be at least 62 years old, own your home outright or have a considerable amount of equity in it, and reside in the property as your primary residence.
Application and Counseling: You’ll need to apply for a reverse mortgage through a lender approved by the Federal Housing Administration (FHA). As part of the process, you’ll be required to attend counseling to ensure you understand the terms and implications of the loan.
Loan Calculation: The amount you can borrow is determined based on several factors, including your age, the appraised value of your home, and current interest rates. The older you are and the more valuable your home, the larger the potential loan amount.
Line of Credit: Instead of receiving a lump sum, a reverse mortgage line of credit provides you with a pool of funds that you can access as needed. This line of credit can grow over time, allowing you to access more funds in the future. The unused portion of the line of credit can also earn interest, which increases the available funds.
Repayment: The outstanding loan balance, including any accrued interest, becomes due when you sell the home, move out permanently, or pass away. Typically, the home is sold, and the proceeds are used to repay the loan, but because these loans are FHA-backed, no one will ever owe more than the home is worth at the time the loan comes due. If the sale proceeds exceed the loan balance, the remaining amount goes to you or your estate.
Flexibility and Payments: One advantage of a reverse mortgage line of credit is that you have the flexibility to choose when and how much to borrow. You can access funds at any time, and you’re not required to make monthly mortgage payments. However, you must continue to pay property taxes, homeowner’s insurance, and maintain the property.
Interest and Costs: Like any loan, a reverse mortgage line of credit accrues interest over time. The interest rate may be fixed or adjustable, depending on the terms of the loan. Additionally, there are upfront costs involved, such as origination fees, closing costs, and mortgage insurance premiums.

It’s important to note that while a reverse mortgage line of credit can provide financial flexibility for seniors, it’s crucial to work with a reputable lender to ensure you thoroughly understand the terms.

Jan Jordan is a Reverse Mortgage Specialist serving the Erie, Dacono, 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.

Senior Home Equity Falls – What It Means For Reverse Mortgages

Posted on April 27, 2023May 9, 2023 by janjordan

For the first time in 12 years, senior home equity has fallen, according to the Reverse Mortgage Lenders Association (NRMLA). The decline in home equity has resulted in the collective senior housing wealth sliding from a peak of $12.42 trillion in 2022 Q3 to $12.39 trillion in Q4. According to NRMLA, the dip in equity resulted from a $30 billion increase in senior mortgage debt, while home values remained flat due to the cooling housing market.

A reverse mortgage can be a smart financial decision for seniors, even when senior home equity is declining. The amount of funds someone can receive from a reverse mortgage is based on the value of their home among other factors, so a decrease in home equity can potentially impact the amount of money that can be borrowed. However, even in times of declining home equity, a reverse mortgage can still be a valuable source of income for seniors.

One important reason why it’s important to consider a reverse mortgage now, even as senior home equity is declining, is that home values were previously at their peak. This means that many seniors may still have significant equity in their homes, even if the value has declined somewhat. By taking out a reverse mortgage, seniors can access that equity and use it to supplement their retirement income, cover expenses, or make improvements to their home.

Furthermore, a reverse mortgage can provide a valuable source of financial security, even if the value of the home has declined, because these loans are FHA insured. This means a borrower will never owe more than the balance of the loan OR the current value of the home, whichever is less. Seniors who have a lot of equity tied up in their homes may feel anxious about the impact of declining home values on their financial security. A reverse mortgage can provide a reliable source of income that’s not dependent on the value of the home, which can provide peace of mind and reduce financial stress.

Finally, it’s important to remember that a reverse mortgage is just one option for seniors who want to access their home equity. Depending on individual circumstances, other financial products or strategies may be more appropriate. It’s important to carefully consider all available options and consult with a reputable reverse mortgage lender before making a decision.

In conclusion, while declining senior home equity can impact the amount that can be borrowed with a reverse mortgage, it’s still a valuable financial tool for seniors 62 and over. By providing access to home equity, even in times of declining home values, reverse mortgages can provide a reliable source of income and financial security. But it’s important to consider a reverse mortgage now, while home values are still relatively high, to take advantage of this valuable asset.

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