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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.

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.

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.

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!

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.

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.

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.

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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.

3 Things to Do with a Reverse Mortgage in Colorado

Posted on March 10, 2014June 17, 2014 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 options seniors are using their reverse mortgage funds for:

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 with no income and credit requirements. This FHA insured loan offers funds through a lump sum or monthly installments 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.