March 2018 - Colorado Reverse Mortgage Specialist

Month: March 2018

Senior Housing Wealth Reaches All Time High

Posted on March 30, 2018April 2, 2018 by janjordan

According to the National Reverse Mortgage Lenders Association (NRMLA), housing wealth for homeowners 62 and older grew to $6.6 trillion in Q4 2017, an increase of $149 billion in senior home equity over Q3.

“Today’s retirees are more likely to leave the workforce with a mortgage and other debts that can put stress on monthly cash flow,” said NRMLA President and CEO Peter Bell. “In these situations, financial products that convert home equity to cash could be used to pay off revolving debt from credit cards and reduce or defer monthly mortgage payments. It’s worth doing the math to find out if a mortgage refinance, home equity line of credit, or reverse mortgage loan can help increase financial security during retirement.”

What does this mean for potential borrowers? It means it’s one of the best times to look into a reverse mortgage. Because the amount of funds available to borrowers is based on the appraised value of the home, when the market is good and values are high, the more funds will be available. Many seniors are utilizing the Reverse Mortgage Line of Credit option to secure a large chunk of their equity now, even if they don’t plan to use it until later. This is because even if the market stumbles down the road and housing prices decrease, your reverse mortgage will be unaffected – and in fact, with the line of credit, it will grow.

Reverse mortgages are available to senior homeowners 62 and over – even married couples. They will live mortgage payment free, always retain the title to the home, and because these loans are FHA insured non-recourse, no one – including heirs – will find themselves saddled with the debt after the owner passes. There are also various solutions for adult children or other family members who may want to keep the home in the family.

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.

Three Things You Never Knew About A Reverse Mortgage

Posted on March 19, 2018April 2, 2018 by janjordan

Reverse mortgages are available to senior homeowners 62 and over, even married couples. The borrower will live mortgage payment free and always retain the title to the home. There are many myths and misconceptions that surround reverse mortgages – but there are also some not-so-known perks to the loans.

Here are my top three:

1.) Most Reverse Mortgages are Insured By the FHA

It is normal for older adults to be concerned with the welfare of their children after their passing. This is one of the reasons many seniors balk at the idea of a reverse mortgage – they don’t want to “saddle their children with their debt.”

Fortunately, there are safeguards in place to address this issue.

Almost all reverse mortgage are FHA insured. This means under current guidelines there is a large equity reserve that will always protect their home from going upside down. Even if the homeowner lives to be 110, has used all the equity in the home, and the market has crashed – the heir will NEVER owe more than the home is worth. FHA/HUD have guaranteed that they will cover the bank’s losses should the situation arise. This leaves the homeowner and their estate protected against any possible losses.

It’s important to also know that on the flip side, if the home is worth more than it sells for after the owners passing, the heirs will receive any excess equity available. The bank will never take more than what is needed to pay off the loan.

2.) Reverse Mortgages Have the Option of a Growth Line of Credit

For many years, there were only two ways to tap into home equity when obtaining a reverse mortgage – a lump sum or monthly installments. This is has changed and HUD has added two new options – a Reverse Mortgage Line of Credit (HECM-LOC) which works similar to a Home Equity Line of Credit (HELOC), with the exception the borrowers will NOT be required to make repayments, and the other option is a Reverse Mortgage for Purchase, which allows seniors to use a reverse mortgage to make a home purchase.

The line of credit is just as it sounds, it is a line of credit with funds that are available for the homeowner to take when they need it. But the major benefit to this line of credit is it also has a growth factor attached to it. This means that any money left in the line of credit will grow at a rate that is equal to the interest rate and mortgage insurance rates on the loan.

Here’s an example:

Imagine your HECM-LOC has an interest rate of 4.5% and a mortgage insurance rate of .5%. The combined rate is 5.0%. You have $100,000 in this line of credit which you don’t plan on using for 15 years unless you need it. That $100,000 is going to grow by 5% annually until you begin accessing those funds.

After year one this line of credit is up to $105,000. After year five the LOC is up to $127,500. And After 15 years the total funds in the line of credit are up to nearly $208,000. In 15 years, that 5% return has grown his available funds by 108%!

3.) A Reverse Mortgage Can Be Used To Purchase A Home

Although the Reverse Mortgage for Purchase program has been around for some years, it’s still relatively unknown – even in the real estate community.

Reverse mortgages are an excellent option for retirees looking to buy a home near or far. These loans require a down payment at the time of purchase, but beyond that there are quite a few differences than using a conventional mortgage.

Borrowers are often able to purchase outside their expected “cash purchase” price range, because the cash is used as a down payment and the remainder of the purchase amount is covered under the reverse mortgage loan, while the borrower lives mortgage payment free. The borrower will also always retain the title to the home, just as they would with a conventional mortgage. These loans are also FHA insured, so everything discussed above still applies in that regard. The borrower can own other properties and still qualify as long as the home being purchased is their primary 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 the Cheyenne and Laramie communities of Wyoming. Contact Jan and learn if reverse mortgage is right for you.

Tips for Selling an Inherited Property

Posted on March 9, 2018April 2, 2018 by janjordan

Selling an inherited home can be one of the most difficult situations for both realtor and seller. It can be an overwhelming experience, filled with emotion and lots of questions.

While talking about it is hard, it is smart to be prepared. This includes having conversations as a family to determine who will be included in the will to inherit the home, where the deed to the home is kept and where other paperwork is located.

It’s important to remember that each situation is unique, but regardless of the individual situation there are certain ways you can plan.

Here are four tips to help prepare to sell an inherited home:

Work with a Strong Team of Professionals

This is not a task you want to take on alone, and in addition, you want to work with people who are skilled in this area. This will include a real estate agent, estate lawyer and potentially a tax specialist.

A real estate agent can offer crucial, local market information that is helpful if the heir does not live nearby.

Lawyers and tax specialists can help with important information such as how it will affect the estate and the tax implications the heir may face due to the sale.

Get Organized and Do a Walk Through

Going from room to room and looking at everything from the condition of the floors to how fresh the paint looks can help determine what may need to be done to the home to help it sell quickly.

If the inherited property is older, a home inspection is important before making any decisions as there may be certain systems that need renovations.

Equally important is to gather all of the necessary paperwork such as the deed to the home as well as researching whether there are any mortgages on the inherited property that need to be paid.

Even if the original mortgage was paid off, a reverse mortgage may have been negotiated to help cover expenses. Also look into local property taxes and when they were last paid.

Get the Home Appraised and Price it Correctly

A real estate agent can also provide counsel on an appropriate listing price to match market value. If the heir happens to live out of town, a real estate agent can offer direction to competent inspectors to complete the appraisal, as well as other professionals to assist in the home selling process.

Consider Staging and Cosmetic Improvements

It’s not uncommon for the interior of an inherited property to be outdated. Staging and making cosmetic improvements can really make a difference in these situations.

If you’re not sure staging is necessary, ask your real estate agent. They have a good pulse on similar homes on the market, when you may not. They may also suggest making home design improvements such as repainting rooms and/or landscaping.

Other points to consider are landscaping and the exterior of the home. Even if the inside is top-notch, don’t make getting them through the front door a challenge.

Should Home Equity Be Used In Retirement Planning?

Posted on March 2, 2018March 9, 2018 by janjordan

Did you know home equity can be used to reduce the overall risk of your retirement plan? Your house is a great asset that for many years has been overlooked in financial planning for seniors. This is making a sharp turn lately as retirement experts are beginning to understand how tapping into home equity via a reverse mortgage should never be underestimated.

Let’s take a look at where most seniors sit currently when it comes to retirement…

• Only 22 percent of workers are very confident they will have enough money in retirement.

• 45 percent of Americans have saved exactly nothing—zero.

• The expected lifespan of women is 20 years past the age of retirement, and two years longer than men.

• The average retiree can expect to spend $220,000 in out of pocket health care costs during retirement.

• Medicare pays for an average of 62% of a seniors health care costs, leaving 38% to come out of pocket.

• 36% of up and coming retirees will rely on Social Security as their sole income.

A reverse mortgage can help in many different ways – and the how the funds are spent is entirely up to the borrower. Whether it’s a monthly payout or a line of credit, when combined with other retirement planning tools, reverse mortgage can allow retirees financial security during the years they worked so hard to enjoy.