Retirement Archives - Page 9 of 12 - Colorado Reverse Mortgage Specialist

Category: Retirement

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What Does it Mean When a Reverse Mortgage is FHA Insured?

Posted on August 10, 2018August 23, 2018 by janjordan

If you’ve taken the time to learn even a little bit about a reverse mortgage, it’s likely you’ve heard the term “FHA insured” at least a couple of times. But what exactly does it mean?

Homeowners 62 and over, with significant equity in their home, may be eligible for a reverse mortgage. These loans are typically insured by the FHA and provide non-taxable income to the borrowers based on the available equity in the home. The more equity and the older the borrower, the more funds available. The funds can be accessed via a line of credit, monthly installments, a lump sum, and even can be wrapped into the purchase of a new home. The borrower can always use the funds for whatever they deem fit.

The homeowner will live mortgage payment free for as long as they remain in the home, although they will have a few financial obligations related to the house such as homeowners insurance, property taxes, utilities, and HOA fees. As long as the borrowers keeps current on these few obligations, they cannot be evicted from the home or made to repay the loan. The loan comes due once the last borrower has left the home for 12 consecutive months or passes away. At this time the loan will be due and payable with time allotted to allow for transitions. This is where the FHA insurance comes in.

In the case of a death, the home with pass onto the heirs. At this time they have two options – 1) Pay off the loan and keep the home (often through life insurance or sale of another asset), or 2) Sell the home.

In the scenario of loan repayment the heirs will never have to repay any more than the home is appraised for. They will only be required to pay 95% of the appraised home value or the full amount of the loan, whichever is less. Any amount due on the loan above the appraised amount will be covered by the FHA insurance and no one will be held liable.

In the case of a home sale, the heirs will never be required to pay more on the loan than the home sells for as long as the sale price is at least 95% of the appraised value. Any remaining balance will be covered by the FHA insurance. On the other hand, if the home sells for more than the loan balance, the heirs will keep any remaining funds. This is especially important as over the years the housing market shifts.

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.

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How to Delay Social Security with a Reverse Mortgage

Posted on August 3, 2018August 23, 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.

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.

Will A Reverse Mortgage Affect Social Security, Medicare & Pension?

Posted on July 13, 2018July 16, 2018 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.

Can Reverse Mortgage Help You Achieve Your Retirement Vision?

Posted on July 6, 2018July 16, 2018 by janjordan

In an era where “retirement” has taken on whole new meaning and commonly lasts for two or three decades, more and more retirees are ready to live the latter part of their life to the fullest. They see this as a time to enjoy life after years of working and raising a family. But in order to achieve these goals retirees need a plan, but first they need a vision.

For those ready to realize their retirement dreams, start by asking some simple questions:

If your retirement could be anything you hoped for, what would it include? Would you buy a vacation home? Move closer to family and grandkids? Take a yearly cruise? Visit Europe? Volunteer with your most passionate charity? By articulating your desires, you can better prioritize your wants and needs, and consider these costs when developing a retirement plan.

Determine other expenditures that may hinder these goals. Healthcare, home modifications and improvements, debt, and other scenarios like this are the most common. These expenses can arise later in retirement, so preparing for them upfront is often an important consideration.

What are the expectations between yourself, your spouse (if you have one), and your family? It’s amazing how often what is assumed and what is reality vary greatly. So many retirees feel they need to hold on to their assets because they want to pass a home or a vast inheritance down to their children, yet their children would much rather see their parents live their two or three decade retirement to the fullest. Make sure the lines of communication are open and no one is afraid to ask tough questions. The answers may be surprising.

No matter what your retirement vision is, reverse mortgage can help you achieve it. For seniors 62 and over a reverse mortgage can provide funds to achieve goals, frees up those strapped by limited incomes, and even help purchase a new home.

3 Things to Do with a Reverse Mortgage in Colorado

Posted on June 25, 2018July 16, 2018 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.

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.

Using Home Equity in Retirement

Posted on June 8, 2018June 19, 2018 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 mortgageshould never be underestimated.

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

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

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

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

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

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

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

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

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

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

What Will I Be Responsible For After I Get A Reverse Mortgage?

Posted on May 25, 2018May 29, 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.

Should You Stay or Should You Go During Retirement?

Posted on May 18, 2018May 29, 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.

Is Reverse Mortgage Good Financial Strategy?

Posted on May 11, 2018 by janjordan

Reverse mortgages are available to seniors 62 and over who either have their home paid off or have substantial equity. Certain criteria applies to the home in order to meet HUD’s rules, and although anyone on the loan must be 62 and over, they are available to married couples the same as individuals. The funds available from these FHA insured loans are available in various ways including monthly installments, a lump sum, a line of credit, and as a purchase option. Even with all these funding choices, reverse mortgages are not right for everyone but they are a perfect match for many.

When is Reverse Mortgage a good financial strategy?

Think of reverse mortgage as a financial tool that turns home equity into cash WITHOUT incurring a loan payment, unlike a traditional mortgage or home equity loan. No repayment is due as long as the borrower is living in the home. This also goes for married couples, in which case no repayment would be due until the last borrower permanently leaves the home. The borrower will still be responsible for some things related to the home, such as property taxes and homeowners insurance.

Reverse mortgages are increasing in popularity as more retirement and financial planners are recommending their use as a potential tool. Typically retirement planners have used a three legged stool as an example for their clients – saving, social security, and pensions make up this visual structure. But with changes in the economy and uncertain futures, pensions are disappearing. In this scenario, those who are “house rich, but cash poor” may find using home equity to balance out the stool is a saving grace. In addition, for those secure in all three areas, adding home equity can be used as a safety net or to delay, thus enhance, certain areas.

The reverse mortgage industry underwent some changes last year as legislation was passed making these loans a safer option for both borrowers and lenders. As a result, the reputation that once surrounded the industry has drastically improved and their use is being studied by some of the most prominent retirement experts.

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.