janjordan, Author at Colorado Reverse Mortgage Specialist

Author: janjordan

What Happens When To A Reverse Mortgage After Homeowner Passes?

Posted on September 30, 2024October 9, 2024 by janjordan

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 and Kelsey are Reverse Mortgage Specialists serving the Erie, Dacono, 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 Kelsey to learn if a reverse mortgage is right for you.

Navigating Reverse Mortgage Lenders and Experts

Posted on September 23, 2024September 25, 2024 by janjordan

When you start navigating the waters of reverse mortgages, you will undoubtedly come across MANY different companies and individuals ready and willing to help. Flashy ads, website calculators, famous spokesmen, and more. But who are all these people? And what is the difference between them? How do you know what is the best fit for YOU?

Here’s some information I think anyone considering a reverse mortgage needs to know about the various professionals who work in the industry:

Banks and Credit Unions – Most local banks and credit unions do not offer reverse mortgage loans, although sometimes the larger ones will. Unfortunately seeking a loan through them can often mean little or no face-to-face time, and it’s not uncommon for these banks to leave the industry down the road. At one time Wells Fargo and Bank of America were in the business, but they quit, leaving their borrowers with loans that few employees can understand and little help if reverse mortgage customers need it.

Brokers – A reverse mortgage broker is a third party individual that is licensed by the state but doesn’t work directly with a lender, instead they essentially shop the marketplace. When working with a broker, borrowers will pay higher fees because they will have to cover the costs of the broker. In addition, because all transactions run through a third party, things can easily get slowed down or even stalled completely.

Direct Lender Specialists – This is the category I fall into. Working directly with a lender that specializes in FHA insured HECM reverse mortgages, such as Mutual of Omaha, direct lender specialists are able to offer local, personal, face-to-face time with clients, and eliminate the need for costly third-party fees. We are able to do all this while ensuring the smoothest, most efficient transaction possible because they are handling the loan and not farming it out to another company.

Reverse mortgages are available to individuals and married couples age 62 and older. These FHA insured loans allow homeowners to live mortgage and loan payment free until they pass away, permanently leave the home (meaning 12 consecutive months), or they default on financial responsibilities associated with the home, such as property taxes or homeowner’s insurance. The funds are available via monthly installments, a line of credit, a lump sum, or even to purchase a home.

Quick Facts: Reverse Mortgage Line of Credit (HECM-LOC)

Posted on September 16, 2024September 25, 2024 by janjordan

The HECM Reverse Mortgage Line of Credit is still relatively new, and to this day many within the financial and retirement industries haven’t fully grasped how it works. Well, they need to get on board because consumers are interested – and they should be. Here’s why..

First, what is a line of credit? Simply put, a line of credit are funds available to you through a financial institution that you can access as needed, or not at all if the need doesn’t arise. Interest is not acquired if the funds are not used. This makes line of credit options excellent safety nets, especially for the purpose of creative retirement strategy.

When looking at a HECM Reverse Mortgage Line of Credit, the two are obviously intertwined, meaning the qualification requirements for any reverse mortgage still apply. These are: age 62 and over, using your primary residence for the loan, this home must meet HUD’s guidelines and needs to be either paid off or have substantial equity, and the borrower must have the financial capability to continue to pay homeowners insurance, property taxes, and the like. Because there are various options to receive the payout from a reverse mortgage, the line of credit is only one of them.

When you have a reverse mortgage line of credit, you have money that is available to you — but you only accrue interest on the money you withdraw. This means the reverse mortgage line of credit can act as an excellent back up source of funds or can be used for retirement fun, whether it be vacation, spoiling grandchildren, or knowing you have the funds available when you’re ready to take on new ventures.

There are other benefits though. This line of credit is pretty astounding beyond just being a safety net.

Growth: Not only are you not paying interest, but your untouched reverse mortgage line of credit can grow in value. Money in a reverse mortgage line of credit grows at the same rate as the interest rate on the loan PLUS 1.25% monthly. So, if the interest rate on your reverse mortgage is 2.50%, then your line of credit will grow at 3.75% (2.50% + 1.25%).

Unique: This growth is unique to reverse mortgage lines of credit — a HELOC for example does not grow.

Hedge Against Falling House Prices: The growth in a reverse mortgage line of credit is guaranteed — without withdrawals, your line of credit is guaranteed to grow. This means you lock in the current value of your home without taking out an interest acruing loan.

Pretty great, isn’t it?

Should You Pay Off A Traditional Mortgage With A Reverse Mortgage?

Posted on September 2, 2024September 25, 2024 by janjordan

Recently released data shows that senior-held mortgage debt has reached a record high of $2.3 trillion. Some are using reverse mortgages to eliminate this debt, but it’s still a very low amount.

So, when is this a good strategy?

1.) They’re living in a house they can’t afford

When many older adults reach retirement, they have to figure out out how to live on a fixed income and how to make their other retirement assets last for what is often decades. Tapping into a reverse mortgage will both eliminate the weight of the mortgage payment, and often even allow extra funds to use throughout the remainder of their lives.

2.) They want to purchase a different home

It’s not uncommon for retirees to purchase a home in retirement. But few know they can do this with a reverse mortgage instead of a conventional one. This allows buyers to either preserve assets and income, or purchase a home that would typically be out of their price range. Click here to learn more about the Reverse Mortgage for Purchase program.

3.) They don’t want to interrupt performing assets

For those with retirement investments that are doing well, drawing from these to make mortgage payments could be a bad move. Using a reverse mortgage to eliminate mortgage payments can be a win-win in the long run.

Reverse mortgages use the equity in your home to allow access to cash through monthly payments, a lump sum, or a line of credit while living mortgage payment free. The borrower and the home must meet certain qualifications, such as age (62 or older), and HUD’s home eligibility requirements, and they must also continue to pay and maintain certain responsibilities such as property taxes and homeowners insurance.

Jan Jordan and Kelsey Jorck are Reverse Mortgage Specialists serving the Erie, Dacono, Fort Lupton, Windsor, Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado. Contact Jan and Kelsey to learn if a reverse mortgage is right for you.

As Senior Housing Wealth Continues To Rise, Is It Time To Consider A Reverse Mortgage?

Posted on August 26, 2024September 25, 2024 by janjordan

Older homeowners continue to break home equity records as home values appreciate across the nation. As of the third quarter of 2023, senior housing wealth was estimated to be $13.08 trillion, according to the National Reverse Mortgage Lenders Association (NRMLA) and RiskSpan. This is a record high for senior housing wealth, and was driven by home price appreciation. However, senior-held mortgage debt also reached a record high of $2.3 trillion, offsetting some of the gains.

That brought senior housing wealth to a record-breaking $13.19 trillion trillion in the first quarter of the year, according to a quarterly index published by National Reverse Mortgage Lenders Association and RiskSpan.

Reverse mortgages have become a critical component to helping fund retirement alongside other tools such as 401(k)s, IRAs, savings, investments, and Social Security.

Because the amount available for the borrower through a reverse mortgage is based on the current appraised value of the home, today’s senior housing wealth numbers indicate this is a great time to explore the reverse mortgage option. The FHA insured reverse mortgage means even if the housing market were to become volatile in the future, the borrower will never owe more than the appraised value of the home at any given time.

Homeowners 62 and over, with significant equity in their home, may be eligible for a reverse mortgage. These loans are typically insured by the FHA and provide non-taxable income to the borrowers based on the available equity in the home. The more equity and the older the borrower, the more funds available. The funds can be accessed via a line of credit, monthly installments, a lump sum, and even can be wrapped into the purchase of a new home. The borrower can always use the funds for whatever they deem fit.

The homeowner will live mortgage payment free for as long as they remain in the home, although they will have a few financial obligations related to the house such as homeowners insurance, property taxes, utilities, and HOA fees. As long as the borrowers keeps current on these few obligations, they cannot be evicted from the home or made to repay the loan. The loan comes due once the last borrower has left the home for 12 consecutive months or passes away. At this time the loan will be due and payable with time allotted to allow for transitions.

This is where the FHA insurance comes in.

In the case of a death, the home with pass onto the heirs. At this time they have two options – 1) Pay off the loan and keep the home (often through life insurance or sale of another asset), or 2) Sell the home.

In the scenario of loan repayment the heirs will never have to repay any more than the home is appraised for. They will only be required to pay 95% of the appraised home value or the full amount of the loan, whichever is less. Any amount due on the loan above the appraised amount will be covered by the FHA insurance and no one will be held liable.

In the case of a home sale, the heirs will never be required to pay more on the loan than the home sells for as long as the sale price is at least 95% of the appraised value. Any remaining balance will be covered by the FHA insurance. On the other hand, if the home sells for more than the loan balance, the heirs will keep any remaining funds. This is especially important as over the years the housing market shifts.

Pros and Cons of Reverse Mortgage For Purchase vs Cash Purchase

Posted on August 19, 2024September 11, 2024 by janjordan

In this day and age, buying a home with cash is rare. And not because of the reasons you may think – such as who has that much cash nowadays? Well, that is part of the reason, but it’s a little more complicated than that. Those who have a substantial amount of cash are finding there are no homes available in their price range and suddenly they don’t have enough cash to be a true “cash buyer”. This diminishes their hopes of living mortgage payment free. For example, if a retired couple sells their home or allots other funds amounting to $170,000 for a new home, they will suddenly be facing a new dilemma – finding a home to meet their needs, that doesn’t need repairs, and is in the community they wish to live. With home prices dramatically increasing in the across Northern Colorado, this scenario is playing out ever more often.

This is where the Reverse Mortgage for Purchase program can provide a solution. Not only will the program add funds to the buyer’s available cash making up the difference needed to purchase an appropriate home, it will also allow that buyer to live mortgage payment free. In addition, putting all your cash into one asset can be a scary thought, especially later in life when the future is largely an unknown, and security is a necessity. When adding a reverse mortgage into the equation, cash home buyers can consider keeping some of the cash or invest it elsewhere.

Here’s how it works:

For seniors 62 and over, home buyers are able to use a reverse mortgage to purchase a home. The amount of the down payment required from the buyer will depend on the amount of the home they are purchasing. But unlike a conventional loan, not only will the lender provide the funds to make up the difference between the home price and the down payment, the buyers will be able to live mortgage payment free for as long as they remain in the home. This frees up income for other things – such as secure retirement living, medical expenses, in home care, vacations, or anything else they may desire. A Reverse Mortgage for Purchase can be used to buy single family homes, town homes, and FHA approved condos. New construction can be purchased, but it must have a Certificate of Occupancy before the loan application can be accepted. The home being purchased will need to be the buyer’s primary residence and the required down payment will need to come from a HUD approved source. And just like a conventional mortgage, the buyer will always retain the title to the home.

Tips For Selling A Home That Has A Reverse Mortgage

Posted on August 12, 2024September 11, 2024 by janjordan

Typically when a senior takes out a reverse mortgage loan on a home, they intend to age there. But on occasion and for various reasons, the homeowners wants to or needs to sell the home before the loan comes due and payable. So, what now?

Although this is an important factor, it’s not nearly as daunting as it sounds. Here’s where to start:

Step 1.) Locate your reverse mortgage loan documents and find any pertinent information regarding the sale of the home. It will vary from lender to lender. Most (but not all) reverse mortgage loans are FHA insured. This means even if you owe more on the loan than the home is worth, you will never owe more than the home sells for.

Consult with a real estate or elder law attorney if you have questions or concerns.

Step 2.) Contact the reverse mortgage lender to get a payoff quote. This combined with a home appraisal will give you a good idea of what the sale will look like and what amount of funds you could potentially walk away with.

Step 3.) Find a real estate agent. When seeking out an agent, be sure to provide your reverse mortgage loan information up front and look for someone who has experience with such a sale.

Step 4.) Prepare the home for sale. From here, everything is similar to any home sale. You want to prep the home, keep it clean for showings, update anything you may need, etc.

Step 5.) Sell the home, pay off the reverse mortgage loan (consult with a real estate or elder law attorney if you have questions when paying off the loan), then reap the rewards. Congrats!

Reverse mortgages are available to seniors 62 and over all over Colorado. To learn more, contact a reputable reverse mortgage lender.

A Comparison: Reverse Mortgage vs HELOC vs Downsizing

Posted on August 5, 2024 by janjordan

Home equity accounts for approximately 70% of a senior’s assets, not including social security or pension. Often times tapping into this equity becomes inevitable when facing health crisis or financial restrictions in retirement. Using home equity should be part of a larger financial plan and there are a few ways it can be incorporated.

Reverse Mortgage

A reverse mortgage is available to seniors 62 and older with married couples being eligible to both be on the loan if both meet the age requirement. Homeowners who obtain these loans do not make monthly mortgage or loan payments but instead receive the funds in a variety of available options, including monthly installment and a line of credit. The loan does not have to be repaid until the last borrower passes away, at which time there are options available to heirs. The amount of the loan depends on the amount of equity in the home and the age of the borrowers – the older the borrower, the more money they can receive. This is an excellent option for both seniors with questionable retirement funds or the retiree who is looking to boost their portfolio.

Home Equity Loan

A home equity loan (HELOC) also taps into equity by borrowing money against the home. This type of loan will be processed as a conventional loan and monthly payments will need to be made to the lender. Any health or future financial concerns should be thoroughly thought through prior to taking out a home equity loan. Loading up the home with debt during retirement can be risky and could result in loss of the home if the borrowers are unable to make their monthly payments.

Downsize

Another option would be to downsize all together by selling the existing home and moving into a more modest situation. Depending on the amount of equity in the home, a homeowner may be able to sell the home for enough money to comfortably be able to make rent or mortgage payments for 10 to 20 years. Just as with a home equity loan, this option could be risky for a person with health concerns as the funds set aside for housing could be needed elsewhere. For homeowners looking to downsize, a Reverse Mortgage for Purchase is also a very good option. This will allow the borrower to move into the home they desire AND eliminate mortgage payments.

Before making any major decisions regarding how to effectively use the equity in your home, it is best to consult with a financial adviser and a reputable reverse mortgage lender.

What You Need To Know To Avoid Identity Theft

Posted on July 29, 2024August 5, 2024 by janjordan

According to the 1998 Identity Theft and Assumption Deterrence Act identity theft is when someone “knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, any unlawful activity that constitutes a violation of federal law, or that constitutes a felony under any applicable state or local law.”

The three most common types of identity theft are:

Financial identity theft (using another’s identity to obtain credit, goods and services)
Identity cloning (using another’s information to assume his or her identity in daily life)
Medical identity theft (using another’s identity to obtain medical care or drugs)

How does Identity Theft happen?

In today’s technology driven society, protecting your identity is more important than ever. But don’t assume identity theft only happens online. It can happen anywhere, anytime. Someone could be watching over your shoulder as you fill out a form at your doctor’s office. Another individual could be rummaging through your trash, hoping to find a tossed out credit card offer. Your email program’s spam filter may not be blocking those emails from Phishing websites. There are many ways to fall victim to identity theft, arming yourself with facts and prevention is key to protection.

How do I protect myself from Identity Theft?

Be aware of your surroundings. When filling out forms that include private information, take a seat away from others when possible. Never throw out forms or paperwork that may have your personal information on them, always take these home with you and dispose of them properly.
Don’t toss out credit card offers or other junk mail that pertains to obtaining credit. In addition, any other private information you have – bills, car registration, insurance documents, bank statements – should always be disposed of properly and NEVER put out with your household trash. These items should be shredded or burned. In addition, limiting the amount of junk mail you receive by “opting out” of mail distribution lists can vastly decrease your risk. Opt out by calling 1-888-5-OPTOUT.
Never follow links to bank accounts, credit accounts, PayPal accounts, etc from an email. “Phishing” emails may appear as a completely legitimate email from your bank or credit card company, warning you of unauthorized transactions or other alarming information. These emails will include links that take you to a website that looks identical to your bank’s – but it’s not. Once you enter your information into this “Phishing” site, you have given some of your most valuable financial information to a con-artist. ALWAYS access your bank and credit accounts by entering their web address into your web browser, NEVER through a link. Reputable companies will not contact you via email about such important matters.
Don’t respond to emails offering money in exchange for “helping” an individual transfer money into the country. These are always scams and have proven to be very dangerous.
Password protect your computer and your wireless internet. Use firewalls and virus protection software.
Never give personal information to telephone solicitors or door to door solicitors. Do not give out personal information over the phone unless you placed the call yourself.
Lock your car. Identity theft via “glove compartment” information is on the rise. Keeping your car locked can ensure you are not an easy target.
Don’t carry your Social Security card in your wallet or purse. Purge expired credit cards, insurance cards, and ID’s regularly. Keep these items at home in a safe place.
If you do not have a locking mailbox, do not mail payments using your mailbox. Always take the mail directly to the post office.

What do I do if think I’ve been targeted?

Contact the Federal Trade Commission at 1-877-IDTHEFT or www.ftc.gov

Assisted Living or Reverse Mortgage: Pros and Cons

Posted on July 22, 2024August 5, 2024 by janjordan

In our society, the elderly and nursing homes go hand in hand. But when speaking with elderly people, one of their biggest fears is being placed into a nursing home. Who can blame them? According to National Center on Elder abuse, one study interviewing 2,000 nursing home residents reported that 44% said they had been abused and 95% said they had been neglected or seen another resident neglected. When considering the psyche of an older senior, nursing homes or convalescent homes mean “end of life”. Often times adult children don’t know a better solution as the needs of the parents increase, the home is no longer suited for their parent, and/or they do not have the funds or the time for in home care. Reverse mortgages have been helping seniors in need for years. But now as retirement planners are realizing the benefit the can offer long term, they are now being used more proactively.

Reverse mortgage is a great method to finance in-home care to avoid nursing homes, pay for medical care, and even fund home modifications. For seniors who are looking to situate long term and prepare to live their golden years in their own home, a move to a new residence closer to family or more suited for senior life may be in order. The reverse mortgage for purchase is perfect option for these situations. Reverse mortgage for purchase allows the purchase of a different residence using a reverse mortgage while still employing the perks of a traditional reverse mortgage – living mortgage payment free. In addition, reverse mortgages do not affect social security, pensions, or medicare.

Both reverse mortgage for purchase and traditional reverse mortgage are available to seniors 62 and over. The home must be the primary residence and it must be a HUD approved property type.