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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.

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.

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!

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.

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.

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.