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Delay Social Security Benefits with a Reverse Mortgage

Posted on February 24, 2016April 19, 2016 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 Reverse Mortgage Info for Fort Collins, Loveland, Greeley, and Front Range areas of Colorado.

What is an FHA Insured Reverse Mortgage Loan?

Posted on December 4, 2015May 16, 2017 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 Reverse Mortgage Info for Fort Collins, Loveland, Greeley, and Front Range areas of Colorado.

Reverse Mortgage Terms to Know – Part I

Posted on March 25, 2015 by janjordan

If you’re considering a reverse mortgage, you’ve likely read a handful of short articles on them, or Home Equity Credit Mortgage (HECM). You probably have a sense of what a reverse mortgage is and what it is not. So you read longer more detailed articles and meet with a lender, only to find yourself in a sea of words that leave you swirling. Like any type of contractual agreement in America, reverse mortgage has its own language to give clear definition to the acting agencies, the building blocks involved and the rights and responsibilities of all parties involved.

The following will help you speak the reverse mortgage language, starting with the basic overarching terms.

A Reverse Mortgage is a loan taken in lieu of home ownership. It gives cash advances to the borrower and does not require repayment until the last borrower passes away or leaves the home permanently. The loan is capped by the value of the home at the time of repayment. The acronym HECM means Home Equity Conversion Mortgage and is the only program of its kind backed and insured by the Federal Housing Administration.

A Mortgage refers to a legal document. The document makes a home available to a lender to repay a debt. A Non-Recourse Reverse Mortgage is a home loan where the amount owed cannot exceed the home’s value at the time of loan repayment. This type of reverse mortgage is FHA insured. Another type of reverse mortgage is called a Proprietary Reverse Mortgage, which have grown quite uncommon. Proprietary reverse mortgages are privately insured by the banks and mortgage companies that offer them. They are not subject to all the same regulations as HECMs, and for this reason borrowers should ensure they understand these loans thoroughly and beware of scams. They are also occasionally called “jumbo” reverse mortgages.

The value of a home, which implies subtracting out any money owed on it is called Home Equity. And Home Equity Conversion is the process of turning the equity into cash. It allows the one receiving to stay in their home without making monthly payments while there, or still alive. It takes what is due to the borrower wrapped up in the years of paying for their home and makes it available immediately.

For seniors 62 and older, regardless of credit or income (until April 27 2015), a reverse mortgage is an option. Utilizing the equity of the asset you already have can help fund the retirement of your dreams – or just your retirement. You will always retain the title to your home and will live mortgage payment free. How you decide to use this asset is up to you, and a common misconception is that your home will be lost after you pass. With proper education via required third party counseling and retirement planning, this does not need to be the case.

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 Financial Assesment in Colorado

Posted on March 9, 2015May 30, 2017 by janjordan

The FHA is imposing new rules for borrowers when obtaining a reverse mortgage. The date of these changes has been confirmed by the FHA to be April 27th, 2015.

Borrowers must be 62 or older, be obtaining the loan on a home that is their HUD approved primary residence. Just like with any other type of home loan, the borrower will still be the homeowner and will always retain the title. In addition, similar to a homeowner who owns their home free and clear, there will not be a monthly mortgage payment but the borrower will still be required to pay property taxes, homeowner’s insurance, HOA fees, and basic upkeep and utility payments.

Home values are currently at the highest level since before the recession – and because the amount of the loan is based on the value of the home, there could not be a better time than now to apply for a reverse mortgage – whether it’s a traditional reverse mortgage, a Reverse Mortgage for Purchase, or a reverse mortgage line of credit with exponential growth factor.

One of the most attractive details of a reverse mortgage has always been the lack of credit and income requirements, but this will soon change. The FHA is imposing new rules that will now force lenders to consider credit and income for each applicant, similar to a traditional mortgage, the purpose being to minimize possible defaults due to the inability to pay property taxes and homeowners insurance. But unlike a traditional mortgage, if potential borrowers do not meet this criteria, there are still options through a Fully-Funded Life Expectancy Set-Aside, which is an amount drawn under the HECM that is reserved for payment of property taxes and insurance by the lender; or a Partialy-Funded Life Expectancy Set-Aside which works the same as the Fully-Funded option except a smaller reserve is drawn when borrowers meet credit requirements but not income requirements. The amount of both of these reserves is determined by the age of the borrower and the value of the home. Need more info? Contact me.

Reverse Mortgage for Purchase : A Crash Course

Posted on September 23, 2014 by janjordan

Reverse Mortgages, once typically thought to only help struggling seniors, have undergone enormous changes recently and are being used to help even affluent retirees achieve their retirement dreams and homebuyers purchase new homes.

The Reverse Mortgage for Purchase program is quickly gaining in popularity. This program allows seniors to purchase a home using a reverse mortgage and live mortgage payment free. To qualify for this program, borrower(s) simply need to be age 62 or older, be purchasing a home to become their primary residence, and have their “required investment”. There are no income or credit requirements and just like with any other type of home loan, the borrower will still be the homeowner and will always retain the title. In addition, similar to a homeowner who owns their home free and clear, there will not be a monthly mortgage payment but the borrower will still be required to pay property taxes, homeowner’s insurance, HOA fees, and basic upkeep and utility payments.

The borrower can use this loan to purchase single family homes, town homes, and FHA approved condos. Unfortunately, these loans cannot be used to purchase homes under construction and the home must have a “Certificate of Occupancy” issued prior to starting the application process.

As mentioned above, the borrower will need to have their “required investment” or down payment. This amount is determined by a calculation set by HUD based on: the lesser of the sale price or appraised value, the age of the youngest of the borrowers, and the current expected interest rate. There are many examples available of these numbers to help real estate professionals and borrowers determine the price bracket they should search based on the required investment they have available.

Unlike a traditional mortgage where the loan reaches a “maturity date”, reverse mortgages have a “maturity event”. This is the event which causes the loan to become due and payable. These “events” include: the last remaining borrower passes away, the homeowner sells the home, the last remaining borrower leaves the home for 12 consecutive months, or the homeowner defaults on property taxes or insurance.

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.

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.

Changes to Reverse Mortgage

Posted on September 5, 2013September 5, 2013 by janjordan

I was recently informed that upcoming changes to the FHA Insured Reverse Mortgage program will reduce the amount of proceeds our clients will receive from the loan. FHA may increase rates which, in turn, will decrease proceeds.

In addition, lenders have been notified that there will be stronger qualifying guidelines in the form of a financial assessment. This change may result in taking into account FICO scores, assets, tax and insurance escrows and limiting the amount of draws a customer can take from the loan.

The official guidelines should be out any day and will take effect on October 1, 2013. Counseling and application would have to be completed by the end of September to qualify for existing program guidelines. If you are interested in the FHA-Insured Revers Mortgage, now may be the time to take a second look before the new changes are implemented and qualified funds reduced.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, 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.

What is Required Reverse Mortgage Counseling?

Posted on November 12, 2012December 27, 2016 by janjordan

reverse mortgage colorado — Reverse Mortgage Counselor

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, and Front Range areas of Colorado. Click here to contact Jan and learn if reverse mortgage is right for you.