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Can A Reverse Mortgage in Greeley, CO Provide Guaranteed Cash Flow For Life?

Posted on July 14, 2014 by janjordan

Did you know the average retiree in Greeley, Colorado lives off $1,230 per month from Social Security and a small nest egg? Often times that nest egg only lasts for a portion of the retirement years while their retirement may actually last for two to three decades. This is why 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 with no income and credit requirements. This FHA insured loan offers funds through a lump sum or monthly installments without a monthly mortgage or loan payment. With many protections in place to ensure borrowers are adequately educated before using this option, such as required third-party counseling, reverse mortgages are gaining in popularity among retirees from all walks of life. A reverse mortgage for purchase option is available for those looking to purchase a new residence.

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

Maturity Date versus Maturity Event in Reverse Mortgage Loan

Posted on June 27, 2014 by janjordan

For many who have had a conventional mortgage on their home, they are familiar with the “maturity date”. But with a reverse mortgage, there is no maturity date, only a “maturity event”. So, what’s the difference?

A maturity date indicates the date which the borrower will make the final payment on the loan, including principal and interest. These are used with conventional mortgages.

A maturity event represents a specific event that takes place in the borrower’s life that signifies the loan has come due. Because reverse mortgage borrowers do not make monthly mortgage payments. many seniors see this as an advantage.

Here are some examples of maturity events:

The property is no longer the borrower’s primary residence
The property is sold or transferred out of the borrowers name
The borrower (or last borrower on the loan) passes away
The borrower moves away from the home for more than 12 consecutive months (such as moving into an assisted living facility)
The borrower fall substantially behind on their property taxes, homeowners insurance, or HOA fees.

A reverse mortgage is available to seniors 62 and over, regardless of income or credit, and this FHA backed loans allow the borrowers to live mortgage payment free through their retirement years.

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.

Why Reverse Mortgage for Purchase is Different

Posted on June 17, 2014June 17, 2014 by janjordan

The Reverse Mortgage for Purchase program is an age-based mortgage insured by the FHA for folks aged 62 and older. Unlike a traditional mortgage, monthly payments are deferred and the loan balance increases over time. Because the loan is backed by the FHA, neither the borrower(s) nor their heirs are personally liable for the debt. There are also no credit or income requirements.

So what does all that really mean?

It’s actually very simple…let’s say you use a reverse mortgage to purchase your dream home and decide to move in 10 years. When you sell your home you will receive 100% of the net proceeds after paying off the loan balance at the time of the sale. This is exactly how a traditional mortgage works.

The primary benefit of using a reverse mortgage for purchase comes into play during your living years in the fact that you are not paying a monthly payment to the mortgage company, thereby increasing your monthly cash flow. The secondary benefit is for your heirs. What if at the time of your passing your loan balance is greater than the value of your home — what happens?

In a traditional mortgage scenario your heirs would be forced to sell the home at a loss and cover the difference. The terms of a HECM program mandates that neither you nor your heirs are personally liable to cover the difference if your home is sold for a loss. Simply put, it’s not your problem and no one is coming after your estate for a settlement.

Click here for more specific details on how the Reverse Mortgage for Purchase program works.

(Information courtesy of Security 1 Lending).

Can Reverse Mortgage Help You Achieve Your Retirement Vision?

Posted on June 10, 2014June 17, 2014 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, regardless of income or credit, a reverse mortgage can provide funds to achieve goals, frees up those strapped by limited incomes, and even help purchase a new home.

Reverse Mortgage and the ‘Standby’ Strategy

Posted on May 27, 2014May 27, 2014 by janjordan

In a recent Bloomberg article, the author laid out the case for using reverse mortgage as a responsible option for long-term financial planning. Assistant professor of financial planning at Texas Tech University, John Salter, and two of his colleagues put the scenario to the test.

Here is what they found:

Salter and two colleagues set out to determine if there was a place for reverse mortgages in responsible long-term financial plans. They started by looking at the prospect for a 62-year-old relying on a $500,000 investment portfolio to fund retirement. To reach a 90 percent probability that the money will last 30 years, the retiree could take out just under 3.25 percent of the portfolio’s value annually. (The portfolio is 60 percent stocks, 40 percent bonds.)

The outlook brightened after the planners used what they dub a ‘standby reverse mortgage’ strategy, based on a home valued at $250,000. In a falling market, the reverse was tapped, rather than the portfolio. The retiree repays the money when the market recovers. That supports a 5 percent withdrawal rate, with a 90 percent probability of the money lasting 30 years, Salter says.

Reverses can also be used to create monthly income. Gerald Wagner, CEO of Ibis Software, which does reverse mortgage analysis, crunched some scenarios to test that out. He started with a base assumption of $450,000 in home equity and an $800,000 investment portfolio with a 60/40 allocation. In general, adding the reverse to the mix supported a sustainable withdrawal rate between 5 percent and 6 percent.

Also in reverse mortgages’ favor is tax treatment. The money pulled out is tax-free income and doesn’t count when computing taxes on Social Security income. And a reverse line of credit can help delay taking Social Security until age 70, when retirees get the largest payout.

In order to qualify for a reverse mortgage, the individual must own their home, be at least 62 years old, and have some equity in the home. There are no income, credit, or medical requirements. In general, the older the borrower (or the youngest borrower in the case of couples) and the more valuable the home, the more money available. Other factors also come into play, such as: the appraised home value, interest rates, and the amount of equity in the home.

A Great Solution for Seniors : Reverse Mortgage

Posted on May 20, 2014May 27, 2014 by janjordan

To most, elderly and nursing homes go hand in hand. But did you know when speaking with elderly people, one of their biggest fears is being placed into a nursing home? And who can blame them? According to National Center on Elder abuse, one study interviewing 2,000 nursing home residents reported that 44% said they had been abused and 95% said they had been neglected or seen another resident neglected. When considering the psyche of an older senior, nursing homes or convalescent homes mean “end of life”. Often times adult children don’t know a better solution as the needs of the parents increase, the home is no longer suited for their parent, and they do not have the funds or the time for in home care. This is where reverse mortgage becomes a very important option.

Reverse mortgage is a great method to finance in-home care to avoid nursing homes, or pay for medical care, and fund home modifications. For seniors who are looking to situate long term and prepare to live their senior years in their own home, a move to a new residence closer to family or more suited for senior life may be in order. The reverse mortgage for purchase is perfect option for these situations. Reverse mortgage for purchase allows the purchase of a new residence using a reverse mortgage while still employing the perks of a traditional reverse mortgage – living mortgage payment free. In addition, reverse mortgages do not affect social security, pensions, or medicare.

Both reverse mortgage for purchase and traditional reverse mortgage are available to seniors 62 and over, with no income or credit requirements.

Reverse Mortgage in Retirement : Now or Last Resort?

Posted on May 15, 2014May 27, 2014 by janjordan

Research suggests that many baby boomer and beyond retirees will not be in a financial position to avoid using home equity as part of their retirement strategy, meaning they will be increasingly turning to reverse mortgage. Senior homeowners are more commonly seeking advice from their retirement planners on whether to consider a reverse mortgage now proactively, or later as a last resort. So, what is the right answer?

A recent study compared the efficacy of two simple strategies: (1) establish a reverse mortgage line of credit at age 62, under current lending and interest rate environments – but do not use the line of credit until the retirement investment portfolio is exhausted. Or option (2) wait until the investment portfolio is exhausted, if ever, and establish a reverse mortgage line of credit then, and subsequently begin to use the proceeds to support income needs until that line of credit is exhausted.

Conclusion: The results showed an estimated 30-year survival advantage for early establishment. This holds true under various future interest rate and home appreciation scenarios for real withdrawal rates between 4 percent and 6 percent. However, postponing the establishment of an HECM line of credit should be considered when the adviser and/or client has good reason to believe that home occupancy after loan origination is likely to be short. In a recent blog article, I discussed how a reverse mortgage line of credit increases each month, and the feature is more valuable the longer the borrower wants to stay in their home. Read it here.

Get the full report on this study from Journal of Financial Planning here.

Seniors 62 and over are eligible for a reverse mortgage regardless of income or credit. Use of home equity as part of a retirement planning strategy is becoming more and more realistic as baby boomers face an uncertain economy. Contact me for more information.

5 Things You Should Know About A Reverse Mortgage

Posted on May 1, 2014June 17, 2014 by janjordan

If you’re a senior over 62, reverse mortgage marketing will begin to creep into your life. It’s inevitable. Sometimes it’s big, flashy promises and other times it’s scary horror stories. To help you filter through the hype, here are 5 important things every senior should know about a reverse mortgage:

1. You do not make monthly mortgage payments. Yes, that’s right, homeowners with a reverse mortgage do not need to make monthly mortgage or interest payments as long as they live in the home and keep it as their primary residence. Borrowers will be required to continue paying property taxes, homeowners insurance, general upkeep, and standard utilities (such as water, gas, and electricity).

2. There are no credit or income requirements. It’s true, there are no credit and income requirements to obtain a reverse mortgage. There are, however, borrower and property eligibility requirements. For example, the borrower must be age 62 or older. The home must be their primary residence and the property type will need to meet certain HUD guidelines, meaning it must be a:

Single family home or 2-4 unit home with one unit occupied by the borrower
HUD-approved condominium
Manufactured home that meets FHA requirements

3. You can use a reverse mortgage to purchase a home – even if you’ve never been a homeowner before. There are a few options to use a reverse mortgage to purchase a home. When purchasing a home, the borrower will be required to make a down payment, but will enjoy living mortgage payment free in this new home. Click here for much more information about purchasing a home with a reverse mortgage.

4. Married couples can both be on a reverse mortgage. If both borrowers are 62 and over, both can be on the reverse mortgage. If a spouse passes or moves to an assisted care facility, the remaining borrower can stay in the home. A reverse mortgage lender should be able to answer any questions regarding married couples and ensure both spouses feel confident in their decision.

5. You retain to the title to your home. Yes, you are still the “owner” and you will always retain the title to your home.

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HECM LOC Credit Line Grows Every Month

Posted on April 21, 2014July 31, 2016 by janjordan

Unlike the traditional HELOC’s fixed borrowing limit, the HECM credit line increases at the current compounding rate. This feature is particularly valuable the longer the client stays in their home.

A scenario: A 62 year-old couple has a home worth $200,000 with no mortgage. They get a HECM LOC and keep it in standby, not taking any money out of it yet – perhaps they are keeping it in reserve to help them if their health fails. Say their initial HECM borrowing limit is $100,000 (they could get more but opt not to), and their compounding rate happens to stay at 7.2% for the next 30 years. Using the Rule of 72 for doubling your money their credit line doubles every 10 years, as shown in the table below. Their $200,000 house appreciates 3% a year, so it is worth $360,000 on their 82th birthday. At their 92nd birthday, their home is worth $485,000 – a fraction of what they could withdraw from their $800,000 HECM.

Fort Collins & Loveland Colorado Top Nation’s Most Satisfied Cities

Posted on April 11, 2014April 11, 2014 by janjordan

For those already residing in Fort Collins or Loveland, it will come as no surprise that these cities ranked #1 in a nationwide Gallup poll which asked residents how satisfied they were with their city. But for those living elsewhere, it will suggest there is something wonderful and special in this area. Fort Collins/Loveland has always ranked high in this poll, but it continues to do better. Times Magazine has great write-up about this poll here.

This is a reason reverse mortgages (whether traditional or for purchase) are so popular in northern Colorado. Who would want to leave such a wonderful place? And many seniors want to retire here.

With a reverse mortgage, seniors 62 and over are able to stay in their home throughout their aging years while living mortgage payment free, and without income or credit requirements. Aging in place has quickly become the norm among seniors, opting out of nursing homes or choosing to not move in with adult children. Reverse mortgages help to make this happen.

With a reverse mortgage for purchase, individuals and married couples have the ability to purchase a home and live their years mortgage payment free. With this option, borrowers must have a required down payment which is calculated according to the purchase price of the home. Borrowers are able to chose where they want to live and choose the residence, including homes and condos in senior living communities.