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Category: Information for Adult Children

Use a Reverse Mortgage to Eliminate Your Traditional Mortgage

Posted on February 24, 2023March 8, 2023 by janjordan

It’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.

How to Find a Reputable Reverse Mortgage Lender in Colorado

Posted on February 17, 2023March 8, 2023 by janjordan

For many seniors, a reverse mortgage is a feasible option to living within a budget, without the constraints and worry of excessive financial distress. In order to qualify for a reverse mortgage, the individual must own their home, be at least 62 years old, and have some equity in the home. Funds from a reverse mortgage can be accessed in various ways including a line of credit, monthly installments, a lump sum, and they can even be used to purchase a new home. In general, the older the borrower (or the youngest borrower in the case of married couples) and the more valuable the home, the more money available. Other factors also come into play, such as: the appraised home value, interest rates, and the amount of equity in the home. Once a basic understanding of how a reverse mortgage works, the next step is finding a lender.

Where to find a lender?

Reverse mortgages are marketed in every possible way. Television, radio, mailers, internet, etc. Although not all of these methods ensure trouble, some of them can be scams. When seeking a reverse mortgage lender, it’s important to speak with people you trust. Ask around at your bank or financial institution. Speak with a financial or retirement adviser. Talk with neighbors or friends who have utilized a reverse mortgage. Seek information from the local Chamber of Commerce or Better Business Bureau. Utilize other resources that may be available in your community.

What to look for in a reverse mortgage lender?

Working with a reputable reverse mortgage lender is critical. The reverse mortgage industry is riddled with scams and flashy sales. It can be risky to get involved with a lender who does not offer all the details or who is just looking to make a “quick sell”. A reputable lender will have strong connections in the community, working closely with a network of professional organizations.

Accreditations and ratings?

Seek out a lender that is a member of the National Reverse Mortgage Lenders Association (NRMLA). Members of the NRMLA must conform to a strict code of lending ethic. Look for a lender that is affiliated with the Better Business Bureau (BBB), where you can also learn of any complaints against the company.

Follow your gut.

When it comes down to it, always follow your gut. Just because a lender may meet all this criteria doesn’t mean they will be right for you. If you do not feel comfortable or feel your questions are not being adequately answered, there is nothing wrong with seeking out a different lender.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Lupton, Erie, Lafayette, 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 The Reverse Mortgage Maturity Event

Posted on February 10, 2023February 13, 2023 by janjordan

For many who have had a conventional mortgage on their home, they are familiar with the “maturity date”. But with a reverse mortgage, there is no maturity date, only a “maturity event”. So, what’s the difference?

A maturity date indicates the date which the borrower will make the final payment on the loan, including principal and interest. These are used with conventional mortgages.

A maturity event represents a specific event that takes place in the borrower’s life that signifies the loan has come due. Because reverse mortgage borrowers do not make monthly mortgage payments. many seniors see this as an advantage.

Here are some examples of maturity events:

The property is no longer the borrower’s primary residence
The property is sold or transferred out of the borrowers name
The borrower (or last borrower on the loan) passes away
The borrower moves away from the home for more than 12 consecutive months (such as moving into an assisted living facility)
The borrower fall substantially behind on their property taxes, homeowners insurance, or HOA fees.

A reverse mortgage is available to seniors 62 and over, and this FHA backed loans allow the borrowers to live mortgage payment free. The funds are available in various different ways, including a line of credit, monthly installments, a lump sum, and even to purchase a home.

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.

Everything You Need To Know About Reverse Mortgage For Purchase

Posted on February 3, 2023February 13, 2023 by janjordan

Reverse 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”. 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, and even homes under construction.

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.

A Guide To Different Reverse Mortgage Professionals

Posted on January 27, 2023February 13, 2023 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.

Answering Common Questions Adult Children Have About Reverse Mortgages

Posted on January 13, 2023January 19, 2023 by janjordan

As your parents age, their needs will inevitably change. And as they change, your need to consider options with them will increase. While these conversations may be the first of their kind, it will also be a chance to offer support. Reverse mortgage could be a viable option to meet everyone’s wishes, especially your parents.

Concerns will arise. Here is a brief answer to some of them. For more in depth answers, feel free to contact me.

• If my parents and I decide to repay the reverse mortgage loan, what happens to the equity in the home?

There are two options at this point. The first is a decision by your parents to sell the home and use the money received to pay off the reverse mortgage. The second is to keep the home and choose another way to pay the balance due on the loan. In both options, the borrowers will keep the equity that remains in the home.

• Will the home inheritance Mom and Dad have prepared for me and/or my siblings be used up?

They will be tapping into equity but their home may also be appreciating. If this is the case the appreciation will keep some equity in the home for you to receive upon their passing. This conversation with them will be the most meaningful. Oftentimes parents assume their children want an inheritance and create stress in their lives just so they leave as much as they can. Unspoken assumptions on both sides can leave everyone in the dark. The needs of your parents, and the ability to support themselves without draining anyone else’s finances may outweigh what is received when they are gone.

They may need to know how you really feel about inheritance and your thinking about what it means to you is just as important.

• If my parents take a reverse mortgage out on their home, will it affect their retirement benefits?

This type of loan does not affect the benefits of Medicare or Social Security or other pensions, and additionally, the income is non-taxable. If your parents have other forms of assistance such as federal, state or Medicaid programs, a reputable reverse mortgage lender can help navigate this.

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 creatively to suit your needs and desires.

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

How A Reverse Mortgage Can Ease Concerns Of Adult Children

Posted on December 30, 2022 by janjordan

With Christmas now behind us, many families are reflecting on the holiday. Adult children enjoyed spending time with their aging parents or relatives, grand children and great-grand children were squeezed and showered with adoration. For some spending time with family is an encouraging sign of many happy years to come…but for others, it can be a time that raises concern about health or finances, and questions about how aging parents will continue to cope. Will this person need additional care? Do they need a more adequate home closer to family or suitable for aging in place? How does long term retirement look?

Concerns such as this are very common around the holidays. To better guide you in the right direction and ultimately direct the family in the right direction, here are some questions to ask yourself:

• Are they able to get around by him or herself? Are there stairs in the home?

• Is this person able to take medications without assistance? Is there a health concern that would require more regular supervision, such as Alzheimer’s or Parkinson’s?

• Is your parent able to manage mortgage payments, home-owners insurance payments, and property taxes. Is the home outdated and in need of frequent repairs – such as a furnace, roofing, electricity?

• Where is this home located? Is it in close proximity to relatives, hospitals, etc? Or is it secluded and away from town?

• Is this person lonely? Has he or she suffered the loss of a spouse? Does he or she have a solid social group or close friends?

Based on your answers to these questions, aging at home may be an option for years to come – and reverse mortgage can be a solution to many problems even for married couples. Reverse mortgages allow homeowners age 62 and older to access equity in their home, without acquiring a loan or mortgage payment, and the funds can be accessed via a line of credit, monthly installments, a lump sum, and even as a new home purchase. The homeowner will always retain the title and remains in the home. All reverse mortgages are government insured with an FHA backed loan and no repayment is due until the last borrower passes away or permanently leaves the home. At that time there are several options that include keeping the home in the family. If selling the current residence and moving into a new home is a more reasonable route, Reverse Mortgage for Purchase may be an option.

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 Does It Mean When A Reverse Mortgage Is FHA Insured?

Posted on December 16, 2022December 20, 2022 by janjordan

If you’ve taken the time to learn even a little bit about a reverse mortgage, it’s likely you’ve heard the term “FHA insured” at least a couple of times. But what exactly does it mean?

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.

What Heirs Need To Know When Reverse Mortgage Borrowers Pass

Posted on December 7, 2022December 20, 2022 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.

Getting Your Affairs In Order: A Guide

Posted on November 17, 2022 by janjordan

Important 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.