May 2017 - Colorado Reverse Mortgage Specialist

Month: May 2017

Should You Refinance Your Reverse Mortgage Loan?

Posted on May 25, 2017May 31, 2017 by janjordan

Reverse mortgages are for seniors 62 and older, including married couples, and were once considered a life line. Times have changed, and now reverse mortgages are regularly being incorporated into retirement planning. But refinance a reverse mortgage? It’s not something you hear about often, or maybe you don’t even realize it’s an option. And why would someone want to do this? Well, here are some fast facts:

Who might want to refinance:

• In the case of a remarriage, possibly you want to add the new spouse (note: new borrowers added must be 62 or older).
• Or in the case of divorce, you want to remove a spouse.
• If the housing market has improved drastically, like we’re currently seeing all over northern Colorado, maybe you want to tap into the new equity.
• Better interest rates? Just like with a traditional mortgage, this matters.
• Interested in the Line of Credit option but took out the monthly installments? Then refinance may be for you.

What you need to know:

• The process is similar to that of a traditional mortgage refinance, except you will still be able to live mortgage and loan payment free.
• You will need a new appraisal.
• Some older lenders have exited the reverse mortgage industry, such as Wells Fargo and Bank of America. If you currently have your loan with one of these lenders, you’re not out of luck, you can still refinance through an existing lender.
• You can shop around. You are not stuck with your current lender.
• If your previous reverse mortgage was not FHA insured, you can switch to one that is. The FHA insurance offers consumer protections, including the promise that you’ll never owe more than your home is worth at the time the loan comes due.
• You will need to take part in third party reverse mortgage counseling.
• If you received your reverse mortgage before 2015, be aware some of the requirements have changed. Now income and credit does play a factor, although there are options if you fail to meet the new criteria.
• If you’re not sure you want to stay in the home, refinancing may not be the best move. Instead possibly consider selling the home to pay back the existing reverse mortgage, then look at a Reverse Mortgage for Purchase to downsize or move to a more suitable home.
• After the refinance, the borrower will still be responsible for property taxes, homeowner’s insurance, and other related costs to the home such as HOA fees, upkeep, and utilities.

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.

Why Your Retirement Will Be Different Than Your Parents’

Posted on May 18, 2017May 31, 2017 by janjordan

Decades ago, when our parents were working and raising a family, they looked at retirement as the true golden years. It would be a time when they stopped working and lived off the fruits of their savings and investments. Retirement planners used a three-legged-stool strategy back then. The make up of this stool was Social Security, employer-sponsored retirement plans, and personal savings. But somewhere between their retirement and now this stool became unbalanced – and now today’s retirees are needing to compensate for it. But how?

First, it’s important to remember that these three components of retirement are still an integral part of retirement success, which is why it should be considered how they can be best utilized as well as protected. But it’s also important to consider what else has changed – things like life expectancy, a more active retirement, and a move toward non-traditional and even extravagant retirement goals. Why not have it all? And what are the options to achieve it?

Part-Time Work: It’s not uncommon for retirees to utilize a phased retirement strategy, where they can work and begin receiving benefits. In addition to the obvious point of this – additional income – working can help to delay Social Security benefits, as well as keep older people engaged in the community.

Reverse Mortgage: For those with substantial equity in their homes, a reverse mortgage can be an excellent way to balance out that stool analogy with a fourth leg, or simply get the boost retirees need to live that extravagant retirement life they’ve been dreaming of. Funds are available via a line of credit, monthly installments, a lump sum, and even to purchase home (or a combination). Because the income is not taxed, it can be used strategically with investments, or used to delay Social Security benefits. Another common function is a stand-by strategy that taps the line of credit now, but only uses it during bear markets to protect investments. These FHA backed reverse mortgages do not incur any mortgage or loan payments, although borrowers must keep up with homeowner’s insurance, property taxes, and other associated costs. In addition to living mortgage payment free, they can actually eliminate any existing mortgage or HELOC payments, and the loan is not payable until the last borrower passes away or permanently leaves the home.

Downsizing and HELOC’s: When considering how to make ends meet during retirement, downsizing is often part of the conversation. Selling the home and moving to smaller one, then using any additional equity as a retirement funding source. For anyone considering this, I’d suggest looking at the details of a Reverse Mortgage for Purchase prior to making a final decision. A Reverse Mortgage for Purchase option can allow buyers to get more house for their money, while still having cash to stash away for retirement.

A Home Equity Line of Credit (HELOC) is another common solution. When going this route versus a reverse mortgage, ensure the new monthly payment will not cause damage down the road if other needs arise, like medical care.

Reverse mortgages certainly won’t be right for everyone, but for many they can be used creatively to aid in funding today’s retirement that is so different than what we are used to.

Are You Ever Too Old For A Reverse Mortgage?

Posted on May 10, 2017May 31, 2017 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.

Applying for a Reverse Mortgage : What to Expect

Posted on May 2, 2017May 30, 2017 by janjordan

If you’ve reached the point you are ready to apply for a reverse mortgage, you have likely done a fair amount of research (and if you haven’t, feel free to read through the informational articles here on my blog). So what comes next? Here’s a quick run down of what to expect…

Age qualifications. You’re probably aware the borrower needs to be age 62 or older to qualify, but in the case of married couples who both want to be on the loan, both borrowers will need to be 62 or older. In addition, the loan amount will be calculated of the age of the youngest borrower, with the older the borrower, the more funds available.

Does your home qualify? Not every residence qualifies for a reverse mortgage but many do. The home must be HUD and FHA approved. These include: single family or a 2-4 unit homes with one unit occupied by the borrower, as well as some condominiums and manufactured homes. If you’re looking to purchase a home with a Reverse Mortgage for Purchase, any new construction must have a certificate of occupancy. Once it’s determined your home qualifies, an appraisal will be done to determine it’s value.

Financial Assessment. In some recent changes made by HUD to ensure the continued progress of the reverse mortgage industry, a financial assessment became part of the application process. This is set up to make sure borrowers are financially stable enough to continue to pay property taxes, homeowner’s insurance, and other related costs to the home, although once a reverse mortgage is obtained on the home, there are NO mortgage or loan payments. Although the financial assessment is similar to that with a traditional mortgage, if borrowers don’t meet the traditional criteria, there are still options through a Fully-Funded Life Expectancy Set-Aside, which is an amount drawn under the HECM that is reserved for payment of property taxes and insurance by the lender; or a Partialy-Funded Life Expectancy Set-Aside which works the same as the Fully-Funded option except a smaller reserve is drawn when borrowers meet credit requirements but not income requirements. The amount of both of these reserves is determined by the age of the borrower and the value of the home.

During these first steps, it’s incredibly important to work with a trusted and reputable reverse mortgage advisor and lender. You should never feel pressured or feel your concerns and/or questions aren’t being addressed. Also watch out for scams that some homeowners can easily fall prey to.