Retirement Archives - Page 10 of 12 - Colorado Reverse Mortgage Specialist

Category: Retirement

Three Things You Never Knew About A Reverse Mortgage

Posted on March 19, 2018April 2, 2018 by janjordan

Reverse 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.

How A Reverse Mortgage Can Help You Retire In Comfort

Posted on February 9, 2018 by janjordan

For many who remember the reverse mortgage scares of the yester-years, the terms ‘comfort’ and ‘reverse mortgage’ seem like an unlikely duo. But they shouldn’t be.

Since the FHA and HUD changed a few regulations stabilizing reverse mortgages in 2015, they have quickly been garnering new attention. Whether looking to boost monthly income, protect retirement, or even purchase a new home, reverse mortgage is proving to be a versatile and creative tool.

Here are three ways a reverse mortgage can help make retirement more comfortable:

1.) Supplement retirement income. With a whopping 36% of baby boomers planning to live on nothing but Social Security for retirement, utilizing a reverse mortgage to supplement retirement funds with non-taxable income from the equity of an individual’s home is a great option. The funds can be accessed via monthly payments or a line of credit, and because the loan doesn’t come due until the borrower passes away or permanently leaves the home, they can live their retirement years both financially comfortable and in the comfort of their own home.

2.) Protect and enhance retirement portfolio. For those who have a well prepared plan for their retirement, using a reverse mortgage line of credit to supplement their nest egg can offer great flexibility and even enhance wealth. Some simply want to use the funds to delay Social Security until they can receive the largest amount. Others may have investments they are looking to protect or allow to mature. Retirement and financial planners are now discussing how a reverse mortgage can be used as part of a long term retirement plan.

3.) Purchase a retirement home. It’s still a little known fact that a reverse mortgage can be used to purchase a new home – but it can, and it’s a great fit for so many retirees. Whether looking to moving in to a senior community, move closer to family, or move to a dream home, using a Reverse Mortgage for Purchase should not be overlooked. This amazing program makes the once impossible possible when it comes to home buying.

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 and help creatively suit 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. Contact Jan and learn if reverse mortgage is right for you.

What Responsibilities Will A Reverse Mortgage Borrower Have?

Posted on February 2, 2018February 9, 2018 by janjordan

Reverse 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.

Use a Reverse Mortgage To Delay Social Security

Posted on January 25, 2018February 9, 2018 by janjordan

When planning for retirement, there will no doubt be a discussion about when a retiree should start taking their Social Security benefits.

There are perks to delaying, for example Social Security benefits stand to increase as much as 7-8% per year if you don’t apply until age 70. But many seniors need this income. With the ability to apply for a reverse mortgage at the age of 62, and current low interest rates, retirees stand to actually make gains by using a reverse mortgage to supplement while delaying benefits.

When approved for a reverse mortgage, the borrower can choose from a variety of ways to access the funds. It could be a monthly installment, a lump sum, or even a line of credit that in itself stands to grow over time.

This is a creative way to use the hard earned equity in your home to your benefit. A well educated financial advisor would easily be able to help you decide if this is a good option. Reverse mortgages are available to seniors 62 and over, including married couples, with an approved type of home. The borrower will always retain the title to the home and reverse mortgages are insured by the FHA.

A Look At Data and Housing Desires of Retirees

Posted on December 26, 2017January 3, 2018 by janjordan

If 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.

How Does a Reverse Mortgage Affect My Taxes?

Posted on December 19, 2017January 3, 2018 by janjordan

There are many differences between a reverse mortgage and a traditional mortgage – and taxes are a big one. Here’s a run down of what to expect come tax time if you have a reverse mortgage.

The Tax Liability Issue

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

What About Deductions on Interest?

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

Property Taxes

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

Should You Stay Put During Retirement?

Posted on December 8, 2017January 3, 2018 by janjordan

Retirement 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.

Can A Reverse Mortgage Provide Financial Security?

Posted on November 24, 2017December 4, 2017 by janjordan

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

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

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

What is a HUD Eligible Home for Reverse Mortgages?

Posted on August 17, 2017August 21, 2017 by janjordan

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.

How to Use Home Equity for Retirement Security

Posted on August 3, 2017 by janjordan

Did 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.