Month: November 2012

Reverse Mortgage Tips for Married Couples

Posted on by janjordan
Married Couple and their Reverse Mortgage

 

It’s not uncommon to hear heartbreaking stories of reverse mortgages that left a spouse in dire straits after the other spouse passed away.  How could this happen?  Is it something that you need to worry about?  If you and your spouse are considering obtaining a reverse mortgage, it’s important to understand the long term effect it could have on either spouse once the other passes away and feel confident any appropriate protections are in place.

 

What Married Couples Need to Know 

 

When applying for a reverse mortgage the amount of money you can receive is calculated according to the age of the youngest borrower.  The older the borrower, the more money is available from the lender.

 

If both homeowners are over the age of 62, both homeowners can be on a reverse mortgage loan.  If both spouses are on the loan, the loan continues if either passes away.  If only one spouse is on the reverse mortgage loan when the borrower passes, the loan is due and the home will transfer to the estate.  At this time the heirs will have the option to pay off the existing loan, sell the home, or obtain a conventional loan.  Occasionally this is not a concern if the amount of life insurance is anticipated to be enough to pay off the loan after the borrower dies or another plan has been put in place.

 
Another scenario to consider is if a borrower obtains a reverse mortgage and then remarries.  If this was to happen after the age of 62, it wouldn’t be unheard of for the married couple to live in the home for 20 or more years before the borrower passes.  At this time the new spouse would not be protected under the existing reverse mortgage loan and the loan would be due.  You could consider looking into refinancing the reverse mortgage and adding the new spouse to the loan.

 
And yet one more thing to note is the possibility one spouse needs to move out of the home into an assisted living facility due to health concerns.  If this happens, as long as the spouse that remains in the home is on the loan, they can continue under their current reverse mortgage.

 

Bottom line: If you are married and are considering obtaining a reverse mortgage, it is extremely important to work with a trusted and experienced reverse mortgage specialist who can easily answer all of your questions and address any concerns you may have.  Making sure both spouses are protected should be a lender’s top priority.

 
Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, and Front Range areas of Colorado.  Click here to contact Jan and learn if reverse mortgage is right for you. 

Reverse Mortgage or Home Equity Loan?

Posted on by janjordan
Reverse Mortgage vs Home Equity

 

 

When talking with senior homeowners or their adult children, a common question is why not just get a home equity loan?  It’s important to understand the difference between a reverse mortgage and a home equity loan.

 

Here are some very important differences:

 

Qualifications 

 

A homeowner requesting an equity loan will require conventional financing.  This relies heavily on having sufficient income to repay the loan and favorable credit.  A homeowner applying for a reverse mortgage does not have limitations based on income or credit, but they must be 62 years or older.  What both of the homeowners have in common is the need to have equity in their home that meets the minimum requirements of their lender.

 

Terms

 

Although both loan types accrue interest, the equity loan borrower will be required to make monthly loan payments until the principle is paid off, usually a 15-30 year term.  On the other hand, a reverse mortgage borrower will not be required to make any loan payments and instead, interest will accrue on the principle.  A reverse mortgage does not have a set term and the loan will continue until the borrower leaves the home for a period of 12 months or more, passes away, or repays the loan voluntarily.

 

Effect on Family

 

With a reverse mortgage, after the passing of a homeowner, the heirs will be responsible for determining what they want to see happen with the home.  Heirs are not able to “take-over” a reverse mortgage.  With a home equity loan, the principle would have been paid down over time and the equity would remain in the home for the heirs to do with as they wish according to the loan guidelines.

 

Overall, before making a decision one way or the other, it is important to understand the pros and cons of each loan type and work with a reputable lender to answer any questions you may have.

 

Jan Jordan Reverse Mortgage Info for Fort Collins, Loveland, Greeley, and Front Range areas of Colorado.

What is Required Reverse Mortgage Counseling?

Posted on by janjordan
Reverse Mortgage Counselor

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.

Here is what you can expect at your counseling session:

The potential borrower will need to schedule an appointment directly with a counseling agency. The lender does not initiate or take part in the session, but can provide you with resources to seek out a counselor. The session will take place in person or over the phone – although the FHA recommends a face-to-face meeting whenever possible.

Prior to your appointment, the counseling agency will provide you with a packet of information to allow you to prepare for the session. During the session the counselor will discuss your immediate and long-term financial needs, your reasons for seeking out a reverse mortgage, address any questions or concerns you may have, and clearly educate you on the process as well as the pros and cons of a reverse mortgage. Again, they are not there to “sell” you on the product, but to educate instead.

Once you have completed the counseling session, you will be provided with a “Certificate of Completion”. This certificate verifies to your lender that you have completed the counseling session and that you understand the essentials of a reverse mortgage. Your counselor will also follow up with you to ensure you have no further needs, questions, or concerns.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, and Front Range areas of Colorado.  Click here to contact Jan and learn if reverse mortgage is right for you.