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Unexpected benefits of Reverse Mortgage – Stay at home!

Posted on January 22, 2015January 22, 2015 by janjordan

As you grow older your needs of body, mind and heart change, sometimes requiring assistance. Have you even considered a reverse mortgage to help you with this assistance to stay in your home, instead of moving where that is provided like assisted living or nursing home?

This is a very possible option for those who wish to remain in the place where family memories are held, and familiar rooms hold personal furniture and mementos marking the years.

The average resident of a nursing home lives about four months, so short a time for this cherished time of life. With a little investigation by you, or by your loved ones, a number of other options could prove to be the best choice.

For one, home health care has grown exponentially over the years. Certified aides, care givers and nurses can come to you to meet your defined needs. Add in a bit of tender loving care from family and friends to balance home care, doctor’s appointments, therapy and all the rest and a second option presents itself. In addition to the one on one focus both these options provide are an endless stream of senior services such as meals on wheels, senior centers, day care assistance and many more falling under the umbrellas of social services.

A Reverse Mortgage could be an easy way to create the lifestyle you want, meeting your changing needs, right within your own home!

The first step would be to create a plan for your life of retirement. Set your vision for the future, naming long term health care providers, establishing the roles of family members, look at your resources (or seek professional counsel to assess costs of living for years to come,) and be honest about what needs you have now, and what needs you want to provide for in the future. Include the unexpected in your assessment so the stress of change is not compounded by lack of resources.

Once you make your plan, discuss it with all involved. If it makes sense include those helping you in your will so they can provide a line of continuity from their care for you, to the care of your estate and affairs once you pass.

Review your plan yearly so you have the security and freedom to change as you change. A reverse mortgage can not only provide you by covering your monthly expenses as you live mortgage payment free, but can also be included in the planning process increasing your options as you see how much you will receive from the equity of your home.

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.

The Time is NOW to Consider a Reverse Mortgage

Posted on December 30, 2014April 19, 2015 by janjordan

Did you think it could be better timing to act now when drawing on the equity of your house? It might seem the longer you wait the higher your equity will become, and thus the greater advantage you will have in drawing upon it.

Not so in the case of a reverse mortgage right now, for there is an unusual opportunity to increase your credit line if you act sooner rather than later.

If you are considering a reverse mortgage and secure a credit line at the lower rates available presently, then your credit line will actually INCREASE as the interest rates inevitable rise. The credit lines are set up on a proportionate system based on the current rate and the mortgage insurance premium which means as rates rise in the future, the credit line also grows.

Considering a reverse mortgage now may be the perfect option to be sure you do not outlive your equity, putting your hard work to use for your comfort and your need now. Taking advantage of the lower interest rates could give you a high credit line up front, and lead to an even higher line as the rates grow. Age has less benefit than the present low interest rates.

This means that obtaining a reverse mortgage, which might seem like it is increasing your obligation or debt, could actually yield you the opposite by giving you more, it is a sure fire investment reaping long term benefit from your years of investing in your home.

The time is now to consider a reverse mortgage.

For seniors 62 and older, regardless of credit or income through April 27, 2015 (at which time some changes will be implemented to the qualifying process), a reverse mortgage line of credit is very feasible 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, but the line of credit option is an interesting opportunity that should not be overlooked. 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.

Win – Win with a Reverse Mortgage

Posted on December 22, 2014December 30, 2014 by janjordan

Our country holds value for you having a home you love, and also gives you room to grow and change as life inevitably does. In 2008 the FHA instituted a program making it possible to BUY a home with a reverse mortgage. What an option this could be, and it is only one of many smart financial possibilities reverse mortgages could afford, literally afford, to you.

If you are settled into your place, loving the thought of continuing for many years where you are, you could use a reverse mortgage to pay off any existing mortgages, liens or debts. Reducing your monthly expenses opens all sorts of doors to living the life you wish, perhaps trying a new hobby, visiting family or friends, or even embellishing on the home you have.

As mentioned above, you could also buy a new home with your reverse mortgage. Why might you want this option? Perhaps you want to relocate to a city closer to loved ones, or even change the layout of your home to suit your present needs or desires. Purchasing a new home with a reverse mortgage creates a win-win for all involved! It gives you the financial resources to pay for your dream home in full, up front, avoiding monthly payments. Even realtors and builders benefit when the home creates movement for the local economy as it is released, put on the market, sold and perhaps even renovated.

There is also another compelling consideration for taking advantage of a reverse mortgage. This is YOUR equity, the fruit of years of hard work, devotion and care. It is there for you to enjoy in THIS life so why not give yourself this gift? You could spend the equity before touching your cash assets, giving you physical and emotional security by providing a steady financial foundation. The outcrop here is lightness, joy and options for your continued happiness.

For seniors 62 and older, regardless of credit or income, this is very feasible option. Tap into the equity of the asset you already have and live the life you want through your retirement years. 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 and planning, this does not need to be the case.

Nursing Homes, In-Home Care & Reverse Mortgage

Posted on October 13, 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? When considering the psyche of an older senior, nursing homes or convalescent homes mean “end of life”. Yet with advanced medicine and more active lifestyles, seniors are living far beyond their expectations.

Often, adult children don’t know what to do 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, pay for medical care, or even 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 a 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 – and the money is tax free.

Both Reverse Mortgage for Purchase and traditional Reverse Mortgages are available to seniors 62 and over, with no income or credit requirements. The borrower will live mortgage payment free, retain the title to the home, and will never be forced to leave. Just as with a home owned free and clear, the homeowner will still be responsible for property taxes, homeowners insurance, HOA fees, utilities, and general upkeep. Even married couples can both be on a reverse mortgage and the loan doesn’t come due until the last borrower permanently leaves the home.

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.

Reverse Mortgage for Purchase – from a Client’s Perspective

Posted on September 15, 2014June 29, 2015 by janjordan

This first hand account of how the decision to go with a Reverse Mortgage for Purchase instead of paying cash for a home changed the course of life for these homeowners is really impressive. I absolutely LOVE hearing stories like this!

Reverse Mortgage for Purchase (aka HECM for Purchase) is available to seniors 62 and over. Borrowers are required to meet the same age guidelines as with a traditional reverse mortgage, but instead of using the equity from an already existing home they own, they contribute a down payment towards the cost of a new home and the reverse mortgage lender makes up the remainder of the cost – leaving the borrower with NO mortgage payment. The amount of the down payment is calculated a couple different ways and changes based on the age of the homeowner and the value of the home (click here to learn more about down payments).

We bought our house with a reverse mortgage in 2010. We put down $115K, received as inheritance from my husband’s mother, which could have bought us a 2 BR 1 bath 900 sf on a tiny lot with no mortgage. Instead we have 5 acres, 1850 sf 3 BR 2 bath home, a barn for my 2 horses (which boarding would have been costing us $600 a month at least), 12 x 24 greenhouse, two storage buildings, a workshop, and a pool in an equestrian neighborhood that is peaceful and quiet with no barking dogs, roaring cars, or loud trashy neighbors. The Reverse Mortgage for Purchase gave us the ability to purchase a much nicer home and still live mortgage payment free.

We pay property taxes, insurance, and upkeep. We do not “co-own” the house with the mortgage company as many believe is the case with a reverse mortgage. It is in our names and we can sell it if we decide to do so. The reverse mortgage is treated just like any other mortgage at the time of sale. It’s paid off at closing and the equity goes straight into our pockets. And we do have equity…in fact, since real estate has rebounded, particularly in our equestrian community, we have more equity than when we bought the house even after having the RM for four years.

We have nobody to leave the property to. My husband’s children disappeared out of our lives years ago and I have no kids. We’ve left everything in the hands of our lawyer to be sold and the funds split between two animal charities. If we had offspring we wanted to leave anything to, they would have time to decide what to do with the house – either refinance it and pay off the mortgage, sell it and take any equity, or another option.

~ Happy with Horses

Here are few basics to the reverse mortgage for purchase program:

The purchaser must be age 62 or older (each borrower on title must meet this criteria, although others residing in home do not)
The home being purchased must be the new primary residence
The purchaser must have the “required investment” (down payment) from a HUD allowable source. The funds cannot be borrowed. The required investment can come from the sale of a currently owned asset or money you have had for at least 90 days.
Eligible properties include: single family homes, town homes, and FHA approved condos. A loan can not be applied for on a new construction home until it has a it’s “Certificate of Occupancy”.

Should Seniors Buying a Home Use A Reverse Mortgage for Purchase?

Posted on September 9, 2014September 9, 2014 by janjordan

Seniors typically want to be homeowners, often purchasing a new home during their retirement years – some for the very first time. The reasons they are looking to purchase varies, ranging from downsizing, eliminating burdensome stairs or extensive grounds upkeep, moving closer to family, or possibly purchasing their dream home in a different climate. Whatever the reason may be, using a reverse mortgage to make the purchase is an option that should not be overlooked.

Prior to congress approving the Reverse Mortgage for Purchase (HECM for Purchase) program, homeowners that wanted to purchase a new home and obtain a reverse mortgage needed to do so through two separate transactions. The downside of this is obvious. First, when taking out a conventional mortgage, potential borrowers are held to the high income and credit standards of traditional mortgage lenders. And second, the borrower is subject to closings costs from both loans. Since the initiation of the Reverse Mortgage for Purchase program, seniors wishing to buy a new home and obtain a reverse mortgage are no longer subject to overwhelming standards. With a Reverse Mortgage for Purchase, income and credit are irrelevant, and all the fees are wrapped into one transaction.

Some seniors are cash rich when buying a home, so the question arises why not wait to take out a reverse mortgage? Why do it when purchasing? When using the Reverse Mortgage for Purchase a downpayment is required – but for cash rich borrowers, this means they have the opportunity to use their cash as a down payment and potentially purchase a home in a higher price range than they were originally planning AND still live mortgage payment free. Or, on the other hand, if they don’t wish to shop in a higher price bracket, they can keep some of their cash since the reverse mortgage will cover a portion of the cost of the home. The other major consideration is variable interest rates in the future, as higher rates will reduce the amount a senior can draw on a reverse mortgage. Waiting can be a risky strategy if reverse mortgage is something being considered for the future.

Senior borrowers, 62 and over, can use a reverse mortgage for purchase to buy single family homes, town homes, and FHA approved condos as long as it has a certificate of occupancy. The home being purchased will need to be the buyer’s primary residence. The required down payment will need to come from a HUD approved source. And the borrower will be the owner of the home – just like with a conventional mortgage. Click here to learn more about the details of Reverse Mortgage for Purchase.

Baby Boomers Have Largest Home Equity, Study Finds

Posted on August 28, 2014 by janjordan

Although Zillow’s Negative Equity Report for the second quarter of 2014 may have some negative numbers (for instance there are more than 8.7 million homeowners with a mortgage still remaining underwater), there are a few highlights to mention.

First, while approximately 18.7 percent of Generation X homeowners are underwater on their mortgage only 10.9 percent of Baby Boomers are underwater. In addition, the national negative equity rate continued to decline falling to 17%, down an incredible 14.4 percentage points from it’s peak in 2012. Negative equity has fallen for nine consecutive quarters as home values have risen. This number is expected to fall to 14.9% within the next year.

For baby boomers looking to incorporate a reverse mortgage into their retirement strategy this is very positive news. As retirement planners are working with seniors to develop long term plans to help ensure retirees do not run out of money during their often decades long retirement years, a reverse mortgage line of credit is being considered as a part of the strategy. Since retirees can not only use a reverse mortgage as a line of credit, but also live mortgage payment free, it’s a fantastic option when utilized in a timely and appropriate fashion.

On the other hand, for baby boomers looking to relocate, downsize, or purchase their dream home once they hit retirement, a reverse mortgage for purchase is a very viable option. And with lower negative equity rates across the nation, it is easier to make transitions like this. Not only do the positive housing numbers point to faster sells, but also with nearly 90% of baby boomers having neutral or positive equity in their homes, it means increasingly larger down payments if they are wishing to use all or some of those funds for a reverse mortgage for purchase.

Traditional Reverse Mortgages and Reverse Mortgage for Purchase are available to seniors 62 and over regardless of income or credit. The funds can be received via fixed monthly payments, a one-time lump sum payment, a line of credit – (or a combination of the above), or the purchase option. There are no limitations as to how the borrower can spend the funds. And with retirees living more active and adventurous lives, the more creative, the better!

Reverse Mortgages Can Eliminate House Payment

Posted on August 14, 2014August 18, 2014 by janjordan

Just yesterday, Fox Business published a very thorough article outlining how and why a senior may want to use a reverse mortgage to pay off an existing conventional mortgage loan. After discussing the positive recent changes the reverse mortgage industry has seen, including using it as a retirement planning tool, the article discussed different scenarios and how they would work.

A reverse mortgage is essentially a home equity loan in which the borrower is not required to make payments. The homeowner must be at least 62 years old and income and credit are irrelevant. Although a reverse mortgage does accrue interest, it does not have to be repaid until the last borrower passes away or leaves the home permanently. These loans are FHA insured.

Here is a common scenario from the Fox Business article:

Barbara is a 75-year-old widow with a house worth $400,000. She owes $25,000 on a home equity line of credit, with no other mortgage debt.

Based on her age and the home’s value, she can get a reverse mortgage for up to about $245,600 (the principal limit). Closing costs, including FHA initial mortgage insurance, reduce the available amount to around $234,900.

Under FHA rules, she can get a reverse mortgage, pay off the HELOC balance and take out up to around $111,600 in cash during the first year. A year later, the remainder would be available to her.

A common question with reverse mortgage is who technically owns the home? The borrower does. They will retain the title and can make modifications or upgrades to the home. The borrower is also responsible for paying property taxes, homeowners insurance, utilities and any HOA fees.

In addition, with both HELOC (home equity lines of credit) and Making Homes Affordable home loan modifications geared up to have some major resets, it’s important for seniors and their lenders to be aware that a reverse mortgage may be great solution to eliminate the associated payment all together.

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

Posted on August 1, 2014 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, regardless of income or credit. 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.