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Category: Information for Adult Children

Reverse Mortgage Counseling: What To Expect

Posted on June 30, 2022July 15, 2022 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.

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.

How Reverse Mortgage Perception Has Shifted And What It Means For Borrowers

Posted on June 23, 2022July 15, 2022 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. Click here to contact Jan and learn if reverse mortgage is right for you..

Yes, Married Couple CAN Get A Reverse Mortgage

Posted on June 16, 2022July 15, 2022 by janjordan

It’s not uncommon to hear heartbreaking stories of reverse mortgages that left a spouse in dire straits after the other spouse passed away. How could this happen? Is it something that you need to worry about? If you and your spouse are considering obtaining a reverse mortgage, it’s important to understand the long term effect it could have on either spouse once the other passes away, and feel confident any appropriate protections are in place.

What Married Couples Need to Know

When applying for a reverse mortgage the amount of money you can receive is calculated according to the age of the youngest borrower. The older the borrower, the more money is available from the lender.

If both homeowners are over the age of 62, both homeowners can be on a reverse mortgage loan. If both spouses are on the loan, the loan continues if either passes away and will continue until both borrowers have passed.

Another scenario to consider is if a borrower obtains a reverse mortgage and then remarries. If this was to happen, it wouldn’t be unheard of for the married couple to live in the home for 20 or more years before the borrower passes. At this time the new spouse would not be protected under the existing reverse mortgage loan. If you have reverse mortgage and you remarry, you could consider looking into refinancing the reverse mortgage and adding the new spouse to the loan.

And yet one more thing to note is the possibility one spouse needs to move out of the home into an assisted living facility due to health concerns. If this happens, as long as the spouse that remains in the home is on the loan, they can continue under their current reverse mortgage.

Bottom line: If you are married and are considering obtaining a reverse mortgage, it is extremely important to work with a trusted and experienced reverse mortgage specialist who can easily answer all of your questions and address any concerns you may have. Making sure both spouses are protected should be a lender’s top priority.

Reverse Mortgage Funds Aren’t Just For Emergencies

Posted on May 19, 2022June 7, 2022 by janjordan

One of the best parts of a reverse mortgage is the borrower(s) can do anything they’d like with the funds – while also living mortgage payment free. In Colorado, seniors are more active than ever, whether it be traveling, home improvements, or visiting with family and grandchildren often. As several Colorado cities always make the list of the best cities to retire (including Fort Collins & Loveland in this survey and Firestone, Parker & Louisville in this one) there couldn’t be a better time or place to enjoy life.

Here are 3 fulfilling ways seniors are using their reverse mortgage funds:

Take that trip they always dreamed of – After years of working hard, saving for retirement, and raising a family, some reverse mortgage borrowers are using a portion of their funds to take the bucket list vacation they’ve always dreamed of. This option becomes less probable as they age and makes for a fantastic celebration by the more active seniors.

Visit with loved ones – Whether it’s a sister who hasn’t visited in 10 years, or children and grandchildren, or long lost friends, using reverse mortgage funds to visit with loved ones is a very common today. Travel can be expensive and it holds us back far too often from the visits that mean the most to us, especially as we age.

Make home repairs or upgrades – After a life of caring for others, senior homeowners often find parts of their home may have been neglected. When using a reverse mortgage to tap into home equity without a subsequent loan payment borrowers often make those repairs or upgrades they have been longing for. Whether it’s a sunroom addition or a kitchen remodel, or just dutiful repairs, this is never a bad option.

Reverse mortgages are available to homeowners 62 and over. This FHA insured loan offers funds through a lump sum, monthly installments, or a line of credit and eliminates monthly mortgage payments. 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. And a reverse mortgage for purchase option is available for those looking to purchase a new residence.

What You Need To Know About Reverse Mortgage Appraisals in Colorado

Posted on May 12, 2022June 7, 2022 by janjordan

Getting assessments on just about anything can seem laborious or tedious, who wants to have something close to them looked at with a magnifying glass? But appraisals for reverse mortgage loans are not only very helpful for everyone involved, they’re required by the lender. Part of what determines the amount of funding available from a reverse mortgage is the appraised value of the home. Luckily the process is very simple.

First, after talking with a reputable reverse mortgage specialist, you will submit your application. The specialist or lender will be the one to contact an appraiser who will in turn contact you to set up a time for them to look at your home.

The procedure is standard and involves three steps, the inspection, the research, and the report.

Inspection:

The appraiser will walk through your home with you, he or she might take photographs. It will document features that add value to your home. If the appraiser takes a picture of something in need of repair it lets you know that it matters and gives you a chance to fix it.

Research:

Once the walk through is done, the appraiser’s work continues as they research factors that influence the value they place on your home. Home sales in your area are one area of research. Others include multiple listing services, tax assessor’s records and public records come into play. Anything that will help to give the present value will be taken into account.

The Official Report:

This is the synthesis of the appraiser’s home visit and all the research. The report is used with your loan request. If photographs were taken, they will be included as well.

The appraiser gives this report to the lender who will give you a copy and an updated reverse mortgage figures taking into account the new information.

There are simple things you can do before the appraiser gets to your home to help your loan request. Read my article about preparing your home for an appraisal by clicking here.

Reverse mortgage is an individualized, specialized loan for those 62 and older that allows seniors to tap into the equity of their home while living mortgage and loan payment free. The funds can be accessed via a lump sum, line of credit, monthly installments, or even to purchase a home. If you are planning ahead 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, Dacono, Erie, Boulder and other Front Range areas of Colorado. Click here to contact Jan and learn if reverse mortgage is right for you.

Breaking Down The Costs Of A Reverse Mortgage In Colorado

Posted on May 5, 2022 by janjordan

Over the years reverse mortgages have shifted from being a choice of last resort to a creative and effective retirement planning tool. But still many who do not fully understand how reverse mortgages function will immediately bring up the perceived high cost of originating the loan.

When all costs and variable options are considered, the opposite is true. Reverse mortgages actually cost considerably less when used as a source of income when compared to a portfolio or continuing to make payments from a portfolio after the age of 62. They also allow for financial freedom during some of the most important and valuable times in life.

Let’s start by looking at the actual costs. People are generally familiar with the costs that come with a traditional forward mortgage. They do vary by state but consist of lender fees, third party fees like appraisals and title costs, origination fees, PMI and other miscellaneous costs.

All of those are similar to a reverse mortgage with the exception of one difference: Mortgage Insurance Premium (MIP). This is a 2% fee based on the home value which goes to the FHA to insure the loan.

So, what does that insurance fee get you? Why is it required?

In the case of a traditional forward mortgage, insurance encourages the lender to lend to a borrower with a lower credit score or a small down payment so they are insured by the mortgage insurance company if there is a default. Reverse MIP is much more powerful than forward PMI. It not only insures the lender, but also the borrower AND the borrower’s heirs. The reverse mortgage is a non-recourse loan that requires no payments until the borrower passes away or moves out of the home permanently. That’s a solid guarantee.

As we’ve seen the past few years here in Colorado, home values continue to rise. And just as we’ve seen before, that’s not guaranteed to continue forever. No one really knows what the home value will be next year or a decade from now. With this MIP, the borrower can live a very long life, and even if the home value plummets, if the balance on the loan is more than the value of the house, the MIP fund pays out the loss to the lender. The borrower, or the borrowers’ heirs, will never be responsible for any negative gap between loan balance and home value or any tax liability.

Additionally, it’s very common that there is equity left over to pass on to the children because the home value has increased faster than the loan balance. In this case, even with the FHA insured loan, the heirs will always receive any equity in the home.

Now how do you calculate these additional costs into a financial portfolio? Let’s look at some ways a reverse mortgage can be used.

The first factor is often also the biggest benefit – eliminating a mortgage payment so that cash flow is freed up to invest or use for other purposes. Currently 44% of seniors reaching the age of 62 are still making a mortgage payment. Most can afford it, but it needs to be asked if this is the best use for the money.

The second factor to consider is for those who are wealthy and have what one would consider “plenty of money” with homes that are already paid off. These people still have a cost of living, and often it is high. The funds to maintain their lifestyles has to come from somewhere, whether passive or active income. A reverse mortgage just acts as another source of income, and it is often the most efficient and cheapest income available to someone past 62. Advisors can keep their senior clients fully invested in longer term portfolios while maintaining a cash reserve in the reverse mortgage line of credit. And that line of credit is guaranteed never to be cancelled or closed as long as the borrower meets their basic responsibilities such as paying homeowners insurance, taxes, and other basic fees such as HOA. It also requires no payments and is guaranteed to increase every year that goes by even if the house value does not.

And the third factor is quality of life. As these individuals plan for the rest of their lives in a way only retirees do, the answer isn’t always calculated in dollars and cents, it’s calculated in time spent vacationing with grandchildren and creating memories with friends and spouses. This particular return on investment should never be overlooked.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Lupton, Erie, Lafayette, 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.

Older People Want To Age In Place – And They’re Not Too Worried About How They’ll Do It

Posted on April 29, 2022May 5, 2022 by janjordan

A recent poll found that older adults want to age in place and they actually worry less about it as they get older.

According to the Associated Press:

The older you are, the less you fret about aging in your own home or community.

That’s a key insight from a new Associated Press-NORC Center for Public Affairs Research poll, which found that U.S. adults ages 65 or older feel much better prepared to “age in place” than those 50-64, who are mostly still in the final stretches of their working years.

The poll also documented greater insecurity around aging in place for older Black and Latino Americans, the likely result of a deep-rooted wealth gap that markedly favors white people.

Aging in one’s own home, or with family or a close friend, is a widely held aspiration, with 88% of adults 50 and older saying it’s their goal in an earlier AP-NORC poll.

The outlook among those 65 or older is upbeat, with nearly 8 in 10 saying they’re extremely or very prepared to stay in their current home as long as possible.

But doubts creep in for those ages 50-64. Among that group, the majority who rate themselves as extremely or very prepared shrinks to about 6 in 10, according to the poll.

This relatively younger group is especially likely to say their financial situation is the main reason they don’t feel very prepared to age in place. And they’re also more likely to feel anxious about being able to stay in their communities, get care from medical providers and receive backup from family members or close friends, the poll found.

Part of it may be due to fear of the unknown among people who’ve relied on a paycheck all their lives.

“When you’ve never done it before, and you are only going to do it once, you’re sort of flying by the seat of your pants,” said Leigh Gerstenberger, in his late 60s and retired from a career in financial services. “I spent a lot of time talking to people ahead of me in the journey,” says the Pittsburgh-area resident.

Also, people approaching their 60s may question if Social Security and Medicare will truly be there for them. Stacy Wiggins, an addiction medicine nurse who lives near Detroit, figures she’ll probably work at least another 10 years into her late 60s — and maybe part-time after that. Older friends are already collecting Social Security.

“In my group, you wonder if it’s going to be available,” Wiggins said of government programs that support older people. “Maybe it’s not. You will find people who are less apt to have a traditional pension. Those are things that leave you with a lot of trepidation toward the future.”

Read the entire article here.

Reverse mortgages have long been a strategic way to help fund aging in place. By utilizing a reverse mortgage, the borrower is able to remain in the home mortgage payment free, while accessing the equity in the home to pay for needs that may arise such as improvements to the home or caregivers.

Reverse mortgages are available to those 62 and over, including married couples. 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 a specialist guide you in the many scenarios that are possible and the two of you can think creatively about your needs and desires.

7 Top Reverse Mortgage Myths In Colorado

Posted on April 4, 2022April 6, 2022 by janjordan

Reverse Mortgage was created to give our retiring generation a way to keep their homes and manage the ever increasing costs of life in America after working long and hard over the years. It is an option that could be just right for you. All applicants are required to participate in HUD approved counseling to ensure all their questions and concerns are addressed. Working with a reputable reverse mortgage specialist will also be critical in the process, as this person should be your advocate – even telling you when a reverse mortgage may be wrong for you.

In the meantime, unravel the myths floating around about what a reverse mortgage is and what it does.

Here are a few myth busting facts:

Myth #1: Reverse mortgages are only for poor people.
Fact: Many retirees use reverse mortgage as a way to fulfill their desires for retirement, or to help grandchildren with college, or even to move into their dream home.

Myth #2: It’s free money.
Fact: It is a loan specialized for those 62 years old and older that does not need to be paid back until the last borrower passes away or leaves the home permanently. If anyone attempts to market a reverse mortgage as “free money”, beware as it is likely a scam.

Myth #3: You lose your home.
Fact: The title of your home stays in your hands.

Myth #4: It is not a safe program.
Fact: Reverse mortgages are FHA insured and fully guaranteed – regardless of how you receive the payout.

Myth #5: My equity is safe if I don’t use a reverse mortgage right now.
Fact: Your equity is dependent upon the housing market, which is always changing.

Myth #6: I must be a homeowner or use my current home to obtain a reverse mortgage.
Fact: Reverse mortgages can be used to purchase a home, even if you have never owned a home before.

Myth #7: If I’m married, my spouse will lose the home if I pass away.
Fact: Married couples can both be on the loan if both are 62 or older. There are many ways to ensure both spouses are not at risk.

How A Reverse Mortgage Can Help With Divorce

Posted on March 7, 2022March 10, 2022 by janjordan

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

The Reverse Mortgage Line Of Credit HECM-LOC Is Highly Unique And Here’s Why

Posted on February 21, 2022March 10, 2022 by janjordan

The HECM Reverse Mortgage Line of Credit is still relatively new, and to this day many within the financial and retirement industries haven’t fully grasped how it works. Well, they need to get on board because consumers are interested – and they should be. Here’s why..

First, what is a line of credit? Simply put, a line of credit are funds available to you through a financial institution that you can access as needed, or not at all if the need doesn’t arise. Interest is not acquired if the funds are not used. This makes line of credit options excellent safety nets, especially for the purpose of creative retirement strategy.

When looking at a HECM Reverse Mortgage Line of Credit, the two are obviously intertwined, meaning the qualification requirements for any reverse mortgage still apply. These are: age 62 and over, using your primary residence for the loan, this home must meet HUD’s guidelines and needs to be either paid off or have substantial equity, and the borrower must have the financial capability to continue to pay homeowners insurance, property taxes, and the like. Because there are various options to receive the payout from a reverse mortgage, the line of credit is only one of them.

When you have a reverse mortgage line of credit, you have money that is available to you — but you only accrue interest on the money you withdraw. This means the reverse mortgage line of credit can act as an excellent back up source of funds or can be used for retirement fun, whether it be vacation, spoiling grandchildren, or knowing you have the funds available when you’re ready to take on new ventures.

There are other benefits though. This line of credit is pretty astounding beyond just being a safety net.

Growth: Not only are you not paying interest, but your untouched reverse mortgage line of credit can grow in value. Money in a reverse mortgage line of credit grows at the same rate as the interest rate on the loan PLUS 1.25% monthly. So, if the interest rate on your reverse mortgage is 2.50%, then your line of credit will grow at 3.75% (2.50% + 1.25%).

Unique: This growth is unique to reverse mortgage lines of credit — a HELOC for example does not grow.

Hedge Against Falling House Prices: The growth in a reverse mortgage line of credit is guaranteed — without withdrawals, your line of credit is guaranteed to grow. This means you lock in the current value of your home without taking out an interest acruing loan.

Pretty great, isn’t it?

Jan Jordan is a Reverse Mortgage Specialist serving the Erie, Firestone, Fort Lupton, 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.