January 2020 - Colorado Reverse Mortgage Specialist

Month: January 2020

A Guide For Adults With Aging Parents

Posted on January 27, 2020February 3, 2020 by janjordan

With the holidays behind us, it’s not uncommon for adult children to reach out to me to discuss a reverse mortgage as an option to help their aging parents. They often spend a little more time with family and may realize things are changing with their parents and in their home. Here are my tips to helping your parents or older loved ones…

1.) Talk with them

Don’t hide your concerns or exclude them from the conversation, no matter how uncomfortable it is. Ask them to sit with you and discuss your concerns. Discuss their wants and needs. Learn about their financial situation and retirement resources. Having a honest face to face conversation is the first step to determining what is best for them.

2.) Discuss living arrangements

Find out what your parents want to do long term regarding their home. Discuss what they ultimately want, and what would make them change their mind. According to AARP, 90% of retirees want to age at home. Do they have concerns with their home? Do they need updates? Is the home too big? Too many stairs? Do they want to move to a smaller home? If medical care became a need, how will this be managed?

3.) Look into the various options such as insurance and reverse mortgage

When discussing how to finance potential scenarios, educating yourself about the various options such as long term care insurance and reverse mortgages will go a long way. The two can even be used together by using some of the reverse mortgage funds to pay for long term care insurance, especially when there are medical concerns.

4.) Come to an agreement about how much is expected out of adult children

Adult children may want to give the world to their parents, but is that really feasible? And how do the parents feel about that? Determining expectations all around, along with setting hard boundaries, will ease any resentment down the road.

5.) Seek out a professional

There are many resources for seniors – whether it’s community resources or elder attorneys. When you’re unsure of the options or what is best, enlisting a professional can help to ease everyone’s mind.

Reverse mortgages are available to homeowners 62 and over, including married couples, 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 the Cheyenne and Laramie communities of Wyoming. Contact Jan and learn if reverse mortgage is right for you.

What You Need To Know About Reverse Mortgage Scams in Colorado

Posted on January 20, 2020February 3, 2020 by janjordan

You may hear about email scams, telephone scams, door-to-door soliciting scams – but what about reverse mortgage scams? Unfortunately just as we have scams in every segment of society and at every opportunity, reverse mortgages and seniors are not immune to such activity.

In the past decade, reverse mortgages also known as Home Equity Conversion Mortgages (HCEM), have increased more than 1,300 percent! This certainly offers an astounding opportunity for fraud perpetrators.

What do reverse mortgage scams look like?

Victims may be offered a free home, an investment opportunity, or foreclosure and refinance assistance. Senior citizens are often unsuspecting targets for scammers, as they are not familiar with the multitude of unscrupulous and dishonest “programs” that exist. Scammers reach their victims often through churches, investment seminars, television, radio, billboard, and mailer advertisements.

When considering a reverse mortgage product, it is very important to research the company. Most reverse mortgages are insured by the Federal Housing Authority (FHA). Seek out companies that are a member of the Better Business Bureau and associated with the National Reverse Mortgage Lenders Association.

Tips for Avoiding Reverse Mortgage Scams:

• Do not respond to unsolicited advertisements.
• Be suspicious of anyone claiming that you can own a home with no down payment.
• Do not sign anything that you do not fully understand.
• Do not accept payment from individuals for a home you did not purchase.
• Seek out your own reverse mortgage counselor.

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.

Can You Be Too Old For A Reverse Mortgage?

Posted on January 13, 2020February 3, 2020 by janjordan

The minimum age for a reverse mortgage loan is 62, but what about a maximum age? Is anyone ever too old for a reverse mortgage? I don’t think so, although it won’t be right for everyone.

Reverse mortgages are available to homeowners, or those seeking to purchase a home, who are 62 and older, including married couples. There are NO loan or mortgage payment requirements while living in the home, but they are responsible for continuing to pay property taxes, homeowners insurance, and any other associated costs such as HOA fees and utilities. The loan becomes due when the last borrower passes away or permanently leaves the home (for 12 consecutive months).

Common reasons for seeking out a reverse mortgage include boosting retirement income, strategically protecting retirement assets or delaying the use of them, medical care, or simply to have a safety net. The creative uses for reverse mortgages go full circle. But what about the very elderly? How can it help them?

I once worked with a 100 year old man to obtain a reverse mortgage on his home and fund in-home care while he continued to age. He was able to reside at home with 24 hour care at a cost of $10,000 a month. When I was sitting at the closing table with this client and his lawyer, the lawyer mentioned that that he could move to an assisted living facility at half the cost ($5,000/month). This gentleman’s quick, sharp answer back to everyone? “NO…. I’m staying in my home.” And he did. And I was honored to have helped him be able to do that.

Another example would be if a parent-adult child duo were living together as they both age. In many of these cases, it’s common both are age eligible to be on the loan. And why shouldn’t they be?

Sometimes the elderly want to live out the final years of their life by sharing time and gifts with those they love. Why not offer inheritance while you’re here and can enjoy watching those you love reap the rewards of it?

Whatever the reason, reverse mortgage may be the answer, no matter how old the borrower is.

One concern that can arise is whether or not the elderly can pass the financial assessment needed to obtain the reverse mortgage loan, since they likely have limited income by this point. But older borrowers can tap a larger percentage of their home’s equity, allowing for a potential set-aside of funds to cover required expenses. The reason is that their life expectancy is shorter, meaning the expected term of their loan will be shorter, too.

A Quick Look At How A Reverse Mortgage Impacts Taxes

Posted on January 6, 2020 by janjordan

There are many differences between a reverse mortgage and a traditional mortgage – and taxes are a big one. Here’s a run down of what to expect come tax time if you have a reverse mortgage.

The Tax Liability Issue

Because any funds you receive from a reverse mortgage are essentially an advance on your home equity – equity you already own and have paid for, the IRS does not consider money received from a reverse mortgage as income, they consider it an advance, therefore it is not taxed as income. This is the case regardless of how you receive the funds – whether monthly installments, a line of credit, or a lump sum, you will never pay income tax on this.

What About Deductions on Interest?

Here’s one situation where there is a stark difference between a traditional mortgage and a reverse mortgage. With a traditional mortgage interest and fees paid are tax deductible every year they are paid. This is still the case with a reverse mortgage, except in the scenario of a reverse mortgage the interest is not paid until the loan comes due, therefore it cannot be claimed as a deduction until this point. The loan comes due if the borrowers sells the home, passes away, or permanently leaves the home.

Property Taxes

With a traditional mortgage, property taxes are often taken care of by an escrow service. With a reverse mortgage the homeowner is 100% responsible for making sure these property taxes are kept up to date. If there are financial concerns about the ongoing cost of property taxes, discuss this with your reverse mortgage specialist. There are options to help set aside a portion of the funds to cover ongoing expenses such as property taxes and homeowner’s insurance.

Jan Jordan is a Reverse Mortgage Specialist serving the Boulder, Longmont, Fort Collins, Loveland, Greeley, and Front Range areas of Colorado as well as Cheyenne and Laramie, Wyoming.