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A Hidden Gem – Reverse Mortgage for Purchase

Posted on August 5, 2015August 18, 2015 by janjordan

Nearly everyone is familiar with a Reverse Mortgage and many even know someone who has used one to increase cash flow or help them remain in their existing home. But what many people don’t realize is that you can also use one to purchase a home. This little known portion of the reverse mortgage program, called Reverse Mortgage (HECM) for Purchase, is a golden gem to many seniors who are looking to settle down somewhere other than their current home for retirement. Whether looking to move closer to family, purchase a single level home, or move into a senior community, these homebuyers are able to purchase a home they often wouldn’t be able to afford otherwise while still eliminating mortgage payments – all in a single transaction.

To qualify, the borrower(s) must be 62 years or older, be purchasing an eligible property, have the required down payment, and meet the HECM financial assessment guidelines. Eligible property types are single family residences, new construction where certificate of occupancy has been issued, HUD approved condos and townhomes. Allowable down payment sources include cash from savings or investments, proceeds from the sale of an existing home or asset, gifts. Funds that are borrowed such as a loan or credit cards are not allowed as a funding source. The amount of the down payment varies depending on the age of the youngest borrowers and the cost of the new home.

Working with an educated real estate agent and reverse mortgage specialist will expedite the process, and in most cases in a Reverse Mortgage for Purchase does not take longer to complete than a typical home purchase with a traditional loan.

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.

Reverse Mortgage Questions Answered for Adult Children

Posted on June 17, 2015 by janjordan

As your parents age, their needs will inevitably change. And as they change, your need to consider options with them will increase. While these conversations may be the first of their kind, it will also be a chance to offer support. Reverse mortgage could be a viable option to meet everyone’s wishes, especially your parents.

Concerns will arise. Here is a brief answer to some of them. For more in depth answers, feel free to contact me.

• If my parents and I decide to repay the reverse mortgage loan, what happens to the equity in the home?

There are two options at this point. The first is a decision by your parents to sell the home and use the money received to pay off the reverse mortgage. The second is to keep the home and choose another way to pay the balance due on the loan. In both options, the borrowers will keep the equity that remains in the home.

• Will the home inheritance Mom and Dad have prepared for me and/or my siblings be used up?

They will be tapping into equity but their home may also be appreciating. If this is the case the appreciation will keep some equity in the home for you to receive upon their passing. This conversation with them will be the most meaningful. Oftentimes parents assume their children want an inheritance and create stress in their lives just so they leave as much as they can. Unspoken assumptions on both sides can leave everyone in the dark. The needs of your parents, and the ability to support themselves without draining anyone else’s finances may outweigh what is received when they are gone.

They may need to know how you really feel about inheritance and your thinking about what it means to you is just as important.

• If my parents take a reverse mortgage out on their home, will it affect their retirement benefits?

This type of loan does not affect the benefits of Medicare or Social Security or other pensions, and additionally, the income is non-taxable. If your parents have other forms of assistance such as federal, state or Medicaid programs, a reputable reverse mortgage lender can help navigate this.

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 creatively to 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.

Dispelling Myths About Reverse Mortgage

Posted on June 11, 2015 by janjordan

A reverse mortgage is a specialized form of loan for those 62 years and older. It offers a way to entertain the lifestyle you imagined, from long held dreams of RVing or travel, to the changing desires that come with events like children moving to different states, or just simply the ability to age in financial comfort.

All the hard years of work can be given to you in the form of cash from the equity of your home. This means all the years of mortgage payments to keep your home asset can be accessible to you now. Your home can actually be put to work for YOU.

When you take a reverse mortgage you retain ownership and the title. Very little will change from all the previous years of homeownership, except you will have the ability to cash in on all the value that has been accruing during your years of dependably paying to live there – while living mortgage and loan payment free.

A reverse mortgage is also called a Home Equity Conversion Mortgage (HECM). This unique type of loan comes with peace of mind since the FHA backs it with a 100% guarantee that you will never owe more than the actual market value of this cherished possession. When you take a reverse mortgage the loan does not come due until the last borrower passes away or moves permanently, and at that time there are options available to keep the home in the family or sell it.

More protection is offered as well, as HUD counseling is not only offered, it is required. The counseling is from an accredited independent third party and takes place before any costs for the loan are set in motion. While this may seem like a requirement, it is more of a privilege so you can understand all the details of reverse mortgage.

The funds from a reverse mortgage can be accessed via a lump sum, monthly installments, line of credit, or even to purchase a home. There are no limitations as to how the money is spent – that is completely up to the borrower.

A Reverse Mortgage Appraisal – The Facts

Posted on May 14, 2015 by janjordan

Getting assessments on just about anything can seem laborious or tedious, who wants to have something close to them looked at with a magnifying glass? But appraisals for reverse mortgage loans can be very helpful for you because they lay down where you are in equity. In fact they are required. The process is very simple.

First, after talking with a reputable reverse mortgage specialist, you will submit your application. The lender will be the one to contact an appraiser who will in turn contact you to set up a time for them to look at your home.

The procedure is standard and involves three steps, the inspection, the research, and the report.

Inspection:

The appraiser will walk through your home with you, he or she might take photographs. It will document features that add value to your home. If the appraiser takes a picture of something in need of repair it lets you know that it matters and gives you a chance to fix it.

Research:

Once the walk through is done, the appraiser’s work continues as they research factors that influence the value they place on your home. Home sales in your area are one area of research. Others include multiple listing services, tax assessor’s records and public records come into play. Anything that will help to give the present value will be taken into account.

The Official Report:

This is the synthesis of the appraiser’s home visit and all the research. The report is used with your loan request. If photographs were taken, they will be included as well.

The appraiser gives this report to the lender who will give you a copy and an updated reverse mortgage figures taking into account the new information.

There are simple things you can do before the appraiser gets to your home to help your loan request. Coming in the next article.

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.

Unraveling The Myths Around Reverse Mortgage

Posted on April 27, 2015 by janjordan

Reverse Mortgage was created to give our retiring generation a way to keep their homes and manage the ever increasing costs of life in America after working long and hard over the years. It is an option that could be just right for you. All applicants are required to participate in HUD approved counseling to ensure all their questions and concerns are addressed. Working with a reputable reverse mortgage specialist will also be critical in the process, as this person should be your advocate – even telling you when a reverse mortgage may be wrong for you.

In the meantime, unravel the myths floating around about what reverse mortgage is and does. Here are a few myth busting facts:

Myth #1: Reverse mortgages are only for poor people.

Fact: Many retirees use reverse mortgage as a way to fulfill their desires for retirement, or to help grandchildren with college, or even to move into their dream home.

Myth #2: It’s free money.

Fact: It is a loan specialized for those 62 years old and older that does not need to be paid back until the last borrower passes away or leaves the home permanently. If anyone attempts to market a reverse mortgage as “free money”, beware as it is likely a scam.

Myth #3: You lose your home.

Fact: The title of your home stays in your hands.

Myth #4: It is not a safe program.

Fact: Reverse mortgages are FHA insured and fully guaranteed – regardless of how you receive the payout.

Myth #5: My equity is safe if I don’t use a reverse mortgage right now.

Fact: Your equity is dependent upon the housing market, which is always changing.

Myth #6: I must be a homeowner or use my current home to obtain a reverse mortgage.

Fact: Reverse mortgages can be used to purchase a home, even if you have never owned a home before.

Myth #7: If I’m married, my spouse will lose the home if I pass away.

Fact: Married couples can both be on the loan if both are 62 or older. There are many ways to ensure both spouses are not at risk.

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.

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 in Colorado – Points to Know

Posted on February 25, 2015 by janjordan

The Reverse Mortgage, created to aid the realization of retirees dreams, will be in your face if you have approached, or are approaching, the eligible age of 62. As with the all special offers across Colorado, marketing can promote it in such a way as to allure you – or to terrify you.

There are a number of points to know when you begin to learn about reverse mortgage. These are simple facts and not marketing strategies.

First of all, married couples can both be on the reverse mortgage loan if they are both over the age of 62. This means when one dies, the other can continue living in the home under the same agreement. No changes happen just because both are not alive, giving the one remaining a true security as they navigate through the transition of losing their life partner.

Second, at this time the loan is not dependant on credit score or income. There are simple eligibility requirements: the borrower must be 62 or older, the residence must be their primary residence, and the home must meet HUD guidelines.

Third, there are NO monthly mortgage payments. So long as the borrower(s) remain in the home as their primary residence, their only financial responsibilities are the homeowner’s insurance, HOA payments, property taxes and basic upkeep/utilities.

Fourth, funds from a reverse mortgage will not affect Social Security, Medicare or pensions because they are considered “tax free” income.

And the title of your home stays in your name, there is not a transfer of ownership just because you drew upon the equity of your personal asset.

Last, you could even use a reverse mortgage to buy a new home via the Reverse Mortgage for Purchase program. This a great option for those who wish to be close to family, in a desired location or have a place that fits your new lifestyle.

These are dependable facts to help you sift through all the marketing and information that will come your way.

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.

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”.