Author: janjordan

Financial Planners: Are You Discussing Reverse Mortgages With Your Clients?

reverse mortgage loveland fort collins greeley longmont westminster coloradoWhen financial planners counsel retirees on how to best leverage their retirement portfolio, social security, and other assets, considering a reverse mortgage was long not part of that conversation – but this is beginning to change.

As the myths of the industry are laid to rest, many professionals are beginning to better understand how reverse mortgage can be used as a financial planning tool for seniors who are on a strict budget or who want to live their golden years to the fullest.  Reverse mortgages can often mean the difference between just living and living life to the fullest.

A few tips for financial planners:

  • Seek out and work with a reputable reverse mortgage specialist who has strong ties to the community, lends from an organization that is a member of the Better Business Bureau, and is associated with the National Reverse Mortgage Lenders Association.
  • Make sure you fully understand the information you may be offering your retiree client.  With the amount of misinformation within the industry, if you are not 100% sure of an answer, call your trusted reverse mortgage specialist to ensure the information you are providing is accurate.
  • Communicate with adult children who may have concerns and make sure they fully understand the process from A to Z.  Eliminating misinformation is key.
  • Remember, reverse mortgages are not one-size-fits-all.  Be creative and comprehensive when considering adding a reverse mortgage to a long term retirement plan.  

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. 

Buying A Home? Here’s Why You Should Consider A Reverse Mortgage If You’re 62 or Older

reverse mortgage loveland fort collins greeley longmont westminster coloradoReverse 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 home buyers 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.

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

A Guide To Getting Your Affairs In Order As You Age

reverse mortgage loveland fort collins greeley longmont westminster coloradoImportant information to get your affairs in order.

• Make sure all bank accounts have direct beneficiaries. The beneficiary need only go to the bank with your death certificate and an ID of their own.

• TOD: Transfer On Death deed if you own property. Completing this document and filing it with your county saves your heirs money and time. This document allows you to transfer ownership of your home to your designee. All they need to do is take their ID and your death certificate to the county building and the deed is signed over. Doing this will avoid the home having to go through probate.

• Living Will: Allows one to put in writing exactly what you want to be done in the event you cannot speak for yourself when it comes to healthcare decisions as well as other final decisions.

• Durable Power of Attorney: Allows one to designate a person to make legal decisions if one is no longer competent to do so.

• Power of Attorney for Healthcare: This document allows one to designate someone to make healthcare decisions for their person.

• Last Will and Testament: Designates to whom personal belongings will go too.

• Funeral Planning Declaration: Allows one to say exactly one’s wishes as far as disposition of the body and the services.

• Make a list of all banks and account numbers, all investment institutions with account numbers, lists of credit cards, utility accounts, etc. Leave clear instructions as to how and when these things are paid.

• Make sure heirs knows where life insurance policies are located.

• Make sure someone knows your phone ID, bank ID, account logins and passwords

• Make sure you have titles for all vehicles, RV’s, boats, etc

• Talk with those closest to you and make all your wishes KNOWN. Talk to those whom you’ve designated, as well as those close to you whom you did not designate. Do this to explain WHY your decisions were made and to avoid any lingering questions or hurt feelings.

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

What To Know When A Reverse Mortgage Borrower Passes

A common question and concern surrounding reverse mortgage is what will happen to the home after the homeowners pass away?  Will the bank take possession?  Will it be allowed as inheritance?  Will it be possible to keep the home in the family?  Will the family of he deceased be held liable?  These are very valid concerns – so I’d like to offer some clear and concise guidance.

When the last homeowner passes, whether we’re talking about you or a loved one, the home will transfer into the estate or a specific person according  to the wishes expressed in the homeowner’s will.  At this time there are three main options:

1.  Pay off the remainder of the loan

Depending on the amount of equity that still exists in the home, the financial situation of the family, and just the overall ability of those involved, this may or may not be a feasible option.  It’s not uncommon for a portion of life insurance to be used in this manner.  Because these loans are FHA insured, if the loan is repaid, it will never be more than the home is worth – even if the housing market is in a deep low spot.

2. Obtain a conventional loan.

Many mortgage brokers are familiar with the reverse mortgage process and the right broker will be able to help those in need identify the best route in obtaining a conventional loan and keeping the home.

3. Sell the home

The final option is to sell the home.  When there is not a desire to keep the home, the heirs can sell the home.  When the home is sold, the loan will be repaid and any remaining equity from the sale will go to the heirs.

If there are no heirs or the heirs are not interested in the home, no one will be held liable.

One last note, as long as the communication lines remain open, the bank will typically allow up to one year to help with the transition.  This one year is allotted in three month increments.

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.

Understanding Your Reverse Mortgage Appraisal In Colorado

reverse mortgage loveland fort collins greeley longmont westminster coloradoGetting assessments on just about anything can seem laborious or tedious, who wants to have something close to them looked at with a magnifying glass? But appraisals for reverse mortgage loans are not only very helpful for everyone involved, they’re required by the lender.  Part of what determines the amount of funding available from a reverse mortgage is the appraised value of the home.  Luckily the process is very simple.

First, after talking with a reputable reverse mortgage specialist, you will submit your application. The specialist or lender will be the one to contact an appraiser who will in turn contact you to set up a time for them to look at your home.

The procedure is standard and involves three steps, the inspection, the research, and the report.

Inspection:

The appraiser will walk through your home with you, he or she might take photographs. It will document features that add value to your home. If the appraiser takes a picture of something in need of repair it lets you know that it matters and gives you a chance to fix it.

Research:

Once the walk through is done, the appraiser’s work continues as they research factors that influence the value they place on your home. Home sales in your area are one area of research. Others include multiple listing services, tax assessor’s records and public records come into play. Anything that will help to give the present value will be taken into account.

The Official Report:

This is the synthesis of the appraiser’s home visit and all the research. The report is used with your loan request. If photographs were taken, they will be included as well.

The appraiser gives this report to the lender who will give you a copy and an updated reverse mortgage figures taking into account the new information.

There are simple things you can do before the appraiser gets to your home to help your loan request. Read my article about preparing your home for an appraisal by clicking here.

Reverse mortgage is an individualized, specialized loan for those 62 and older that allows seniors to tap into the equity of their home while living mortgage and loan payment free.  The funds can be accessed via a lump sum, line of credit, monthly installments, or even to purchase a home. If you are planning ahead let your specialist guide you in the many scenarios that are possible and the two of you can think creatively about your needs and desires.

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

How To Use Home Equity In Retirement

reverse mortgage loveland fort collins greeley longmont westminster coloradoDid 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.

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, 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 Mortgages If You Have Medicare, Medicaid Or Pension

reverse mortgage loveland fort collins greeley longmont westminster coloradoA very common concern among seniors and adult children when considering a reverse mortgage is how it will affect social security, Medicare, and even certain pensions.  For many seniors, these benefits are a large part of their income. Fortunately, because the funds from a reverse mortgage are NOT considered taxable income, a borrower’s benefits will not be affected when taking out a reverse mortgage.

On the other hand, borrowers who have Medicaid, TANF, Food Stamps or SSI may see those benefits affected by this additional income.   Because these programs are government sponsored programs with strict approval guidelines based on all sources of income, even non-taxable income, there is a possibility the additional cash flow will need reported.  Other supplemental and assistance programs would need to be addressed on a case by case basis.  Working with a reputable reverse mortgage lender and required third party counseling will ensure all your questions are answered thoroughly and honestly.

Reverse mortgages are available to homeowners 62 and older.  The proceeds can be received as a lump sum, as monthly installments, or a reverse line of credit and can be used for any purpose the borrower sees fit.  This FHA insured loan allows the borrower(s) to live mortgage payment free.

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.  

Use A Reverse Mortgage To Eliminate A Traditional Mortgage

reverse mortgage loveland fort collins greeley longmont westminster coloradoIt’s not uncommon that I get questions about why a senior may want to use a reverse mortgage to pay off an existing conventional mortgage loan.  This scenario would vary from person to person, but in the long run, if the equity in the home can eliminate a mortgage payment without acquiring another loan payment, it’s often a win-win. 

A reverse mortgage is essentially a home equity loan in which the borrower is not required to make payments. The homeowner must be at least 62 years old and meet certain income and credit guidelines.  Although a reverse mortgage does accrue interest, it does not have to be repaid until the last borrower passes away or leaves the home permanently. Almost all of these loans are FHA insured.  There are certain things like property taxes and HOA fees that the homeowner will still be responsible for. 

Here is a scenario:

Barbara is a 75-year-old widow with a house worth $495,000. She still owes $125,000 on her conventional mortgage, with no other mortgage debt such as a HELOC.

Based on her age and the home’s value, she can get a reverse mortgage that would not only pay off her mortgage but give her extra funds as well that could be accessed via a line-of-credit.

She could live mortgage payment free for the remainder of her time in the home.  

A common question with reverse mortgages is who technically owns the home?  The borrower does.  They will retain the title and can make modifications or upgrades to the home.  

In addition, this is a great option for eliminating a HELOC (home equity lines of credit).

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.

Reverse Mortgage For Purchase Explained

reverse mortgage loveland fort collins greeley longmont westminster coloradoWe’re all familiar with the two most common options to purchase a home – take out a mortgage loan or pay cash.  But for seniors 62 and over, there’s another option – the Reverse Mortgage for Purchase program (aka HECM for Purchase).

Looking for a home in Fort Collins, Loveland or Longmont, Colorado but finding it’s a bit out of your price range?  Because the borrower is responsible for only the down payment on the home and will have NO mortgage payments, a Reverse Mortgage for Purchase can help with this too.

What is needed to qualify for a Reverse Mortgage for Purchase loan?

  • you must be age 62 or older (each borrower on title must meet this criteria, although others residing in home do not)
  • the home you are purchasing must be your new primary residence
  • must meet the FHA’s reverse mortgage credit and income guidelines
  • you must have your “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 home or asset, a gift or inheritance, or money you have had for at least 90 days.

Who owns the home that I am purchasing?

 As the borrower and homeowner, you will always retain the title to the home, just like any other type of home loan.

What will my personal ongoing obligations be after purchasing a home?

It’s very similar to if you owned your home free and clear – you will NOT have a monthly mortgage payment.  But as the homeowner, you will be responsible for paying property taxes, home owner’s insurance, HOA fees when applicable, and basic upkeep including home maintenance and utility payments.

When will the loan become due and payable?

With a Reverse Mortgage for Purchase the loan does not reach “maturity” until:

  • the last remaining borrower passes away
  • the homeowner sells the home
  • the last remaining borrower leaves the home for 12 consecutive months due to illness
  • the homeowner defaults on property taxes or insurance

Will I need to sell my current home residence to qualify?

Simply put, no. As long as the loan on your current residence is not an FHA loan and your required investment comes from a HUD allowable source, you can keep your current residence – but the new home will need to be your primary residence. Your lender will ensure you are financially stable enough to support the ongoing obligations on all properties you own. If you decide to keep your current residence as an investment, rental, or vacation property – or you are awaiting the sale of home, it is rarely a problem.

What types of properties can I purchase?

Single family homes, town homes, and FHA approved condos are all eligible properties. The home being purchased will need to be the buyer’s primary residence.

Can I use the loan to build a new home?

Previously these loans could not be used as construction loans and homes needed a Certificate of Occupancy before the loan application could be started.  This changed in the past few years and now homes in construction are eligible.  Read here to learn specifically about obtaining a Reverse Mortgage for Purchase on new construction. 

How is the “Required Investment” amount determined?

The “required investment” or down payment 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
  • The current expected interest rate

What may disqualify me from a Reverse Mortgage for Purchase loan?

  • Foreclosures within the past 3 years.
  • Unresolved bankruptcy
  • Unpaid Federal obligations – i.e. federal taxes, defaults on prior government backed loans (such as student loans or government backed mortgages)
  • Income too low
  • Unpaid judgments or tax liens

What is the HUD required “Reverse Mortgage Counseling”?

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 third party, 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.

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.

Are Reverse Mortgages An Under Utilized Resource?

Two or three decades ago, the idea that an elderly couple or individual could live comfortably in their home far beyond retirement was practically unheard of.  Preparing for aging meant retirement homes, assisted living, or moving in with adult children.  Now today people are living longer and healthier lives than ever, but on the flip-side, they are retiring with less.  The Pew Research Center has found that the percent of adults who said that they “will not have enough money to live comfortably” in retirement rose from 32% to 53% in ten years. Among adults in the 55 to 64 age bracket, the percent who are “not too” or “not at all” confident that they will have enough to live on in retirement rose from 26% in to 39%.  These are alarming statistics.

Many seniors can improve their retirement outlook by considering a reverse mortgage, but very few use it as a retirement tool.  Homeowners, 62 and over, qualify for these FHA insured loans.  When creating a retirement portfolio, looking into home equity and a possible reverse mortgage can often mean the difference between getting by and living well.

So why is this option not utilized more often?  It is usually for one of two reasons: senior homeowners are either unaware or uneducated on the option, or negative public perception has steered them away.  Media coverage may report a negative story, but will fail to include the facts as to why these situations happened in the first place and how they can be prevented.  The majority of reverse mortgages are favorable experiences, although this is not considered newsworthy.  Some financial advisers or retirement planners are ambivalent to reverse mortgages, not adequately educating their client on this possibility.  It’s important to stay educated while watching out for scams.  And working with a reputable lender is critical when going through the reverse mortgage process or obtaining information to share with others.

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