Information for Financial Planners – Colorado Reverse Mortgage Specialist

Category: Information for Financial Planners

USA Today: Retirement In The Time Of Coronavirus

Posted on May 8, 2020May 13, 2020 by janjordan

For most people, achieving a comfortable retirement is a tricky business. The past few weeks have added to the challenges as the world has changed as much as in any period since WWII. The world is now fighting the coronavirus pandemic. COVID-19, as well as the measures taken to slow the spread of the disease, have caused financial and health crises worldwide and have especially affected those who are older than 60. This has made financial and other life decisions for seniors and those planning for retirement infinitely more complicated than they were just two months ago.

24/7 Wall St. looked at the challenges and opportunities people should consider as they move into retirement, particularly at a time of great upheaval and insecurity. This piece is intended to help those who are facing retirement today make choices to best secure their future as the economy collapses to a level last matched at the end of The Great Depression.

In this USA Today article you will find information about 401k contributions, IRAs, Social Security, Reverse Mortgage, downsizing, debt and fixed incomes, and more. Read the entire article here: https://www.usatoday.com/story/money/2020/04/13/what-you-can-do-if-coronavirus-is-threatening-your-retirement/111526548/

Jan Jordan is a Reverse Mortgage Specialist 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 learn if reverse mortgage is right for you.

What’s Older Americans Need To Know About Coronavirus Stimulus Checks

Posted on April 15, 2020April 15, 2020 by janjordan

As part of the coronavirus relief program (CARES Act), millions of Americans are already receiving stimulus funds, and millions will continue to do get them over the coming weeks. The amount an individual will receive depends on their marital status, if they have dependents, and how much income they had in 2018 or 2019.

Those who receive Social Security benefits will be included in the recipients. Here’s what they need to know:

1) If you’re collecting Social Security benefits of any kind you are eligible to receive a stimulus check. This includes retirement benefits, disability benefits, or Supplemental Security Income (SSI).

You will also need to meet the other eligibility requirements. Those are:

You cannot be claimed as a dependent on someone else’s tax return.
In order to receive the full $1,200 stimulus check, you must have an adjusted gross income of less than $75,000 per year (for individuals), $112,500 per year (for heads of household), or $150,000 per year (for married couples filing jointly). If you’re earning more than those limits, you’ll either receive a smaller check or no check at all.

2) Most Americans will need to have filed a 2018 or 2019 tax return to receive their stimulus checks, but that rule doesn’t apply to Social Security beneficiaries. The Treasury Department has said it will use the information the Social Security Administration already has on file to determine who is eligible to receive the checks. That means if you’re currently receiving benefits, you shouldn’t need to do anything to get your check. If you normally receive your benefits via direct deposit, that’s how you’ll receive your check as well. If your benefits come in the mail via paper check, you’ll receive a paper stimulus check.

3) With the rise of the COVID-19 pandemic, many Americans have become prime targets for scammers, and unfortunately this is even more serious among senior citizens. One of the most prevalent are Social Security scams where a fraudster will call, email, or send letters to beneficiaries telling them their monthly checks have been suspended because of COVID-19. Fraudsters will then demand the senior citizen’s personal information or “require” they make a payment to get your benefits reinstated, thus stealing critical personal and financial information. It’s important every day, but especially important right now to be extra cautious. Here are my tips to watching out for scams.

More information can be found at: www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments

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

Retirement Changes For Coloradans Included in Coronavirus Relief Bill

Posted on March 30, 2020March 30, 2020 by janjordan

The recently passed $2 trillion coronavirus relief bill included a series of key retirement provisions. These would relax rules on retirement savings and include the option to take a hardship distribution of up to $100,000 from a 401(k) plan without the 10% early withdrawal penalty if you are under age 59 1/2.

Retirees can also suspend required minimum distributions out of their retirement accounts for 2020. This gives retirees flexibility especially if they don’t need the income.

According to a CNBC article, here are the three retirement relief measures in the package:

Tax-favored plan withdrawals

The bill would allow affected savers to take coronavirus-related distributions of up to $100,000 from retirement plans and individual retirement accounts in 2020.

Those individuals are defined as people who are diagnosed with COVID-19, spouses or dependents who have the disease or those experiencing financial consequences from quarantine, furlough, layoffs or having their hours cut due to coronavirus.

If you’re under age 59½, these withdrawals would be exempt from the 10% penalty that would normally apply.

You’re still on the hook for income taxes on any amounts withdrawn, but the bill right now would give you three years to pay these levies.

“You take the money out penalty-free, that’s OK— but you still owe the tax,” said Ed Slott, CPA and founder of Ed Slott & Co. “You’re still reducing your retirement savings and you still pay the taxes.”

You also have three years to replenish the money you had taken from your retirement account.

Bigger plan loans

The bill would also allow you to take larger loans against the money you’ve saved in your workplace retirement plan.

Normally, you can borrow only up to $50,000 or 50% of your vested account balance, whichever is less.

The measure would double that: up to $100,000 against the amount you’ve saved in your plan.

Plan loans follow a different set of rules than withdrawals. You can borrow against your savings tax-free if you meet certain requirements. If you fail to repay the loan, it’s treated as a distribution and subject to taxes.

Know your employer’s approach to loans, as some plans may require you borrow from your savings before taking a hardship withdrawal, said Paul Porretta, partner at law firm Pepper Hamilton in New York.

Break on required minimum distributions

Starting in 2020, individuals who turn 72 are required to take annual mandatory distributions from their workplace retirement plans and their IRAs.

In prior years, this requirement kicked in after savers turned 70½ years of age.

This is known as the required minimum distribution.

The bill would suspend those RMD payments for 2020, a move that will keep taxpayers from drawing down on savings at a time when the market is in flux over COVID-19 worries.

“The relief bill is for people who are struggling, but this provision isn’t really for people who are struggling,” said Jeffrey Levine, CPA and director of advanced planning at Buckingham Wealth Partners on Long Island, New York.

“This is for people who have enough money that they don’t need to take from their retirement accounts,” he said.

How A Reverse Mortgage Can Eliminate Traditional Mortgage Payments

Posted on March 9, 2020March 30, 2020 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 which 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 mortgage 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.

Understanding Different Reverse Mortgage Professionals

Posted on February 24, 2020February 28, 2020 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.

A Guide For Adults With Aging Parents

Posted on January 27, 2020February 3, 2020 by janjordan

With the holidays behind us, it’s not uncommon for adult children to reach out to me to discuss a reverse mortgage as an option to help their aging parents. They often spend a little more time with family and may realize things are changing with their parents and in their home. Here are my tips to helping your parents or older loved ones…

1.) Talk with them

Don’t hide your concerns or exclude them from the conversation, no matter how uncomfortable it is. Ask them to sit with you and discuss your concerns. Discuss their wants and needs. Learn about their financial situation and retirement resources. Having a honest face to face conversation is the first step to determining what is best for them.

2.) Discuss living arrangements

Find out what your parents want to do long term regarding their home. Discuss what they ultimately want, and what would make them change their mind. According to AARP, 90% of retirees want to age at home. Do they have concerns with their home? Do they need updates? Is the home too big? Too many stairs? Do they want to move to a smaller home? If medical care became a need, how will this be managed?

3.) Look into the various options such as insurance and reverse mortgage

When discussing how to finance potential scenarios, educating yourself about the various options such as long term care insurance and reverse mortgages will go a long way. The two can even be used together by using some of the reverse mortgage funds to pay for long term care insurance, especially when there are medical concerns.

4.) Come to an agreement about how much is expected out of adult children

Adult children may want to give the world to their parents, but is that really feasible? And how do the parents feel about that? Determining expectations all around, along with setting hard boundaries, will ease any resentment down the road.

5.) Seek out a professional

There are many resources for seniors – whether it’s community resources or elder attorneys. When you’re unsure of the options or what is best, enlisting a professional can help to ease everyone’s mind.

Reverse mortgages are available to homeowners 62 and over, including married couples, with many protections in place to ensure borrowers are adequately educated before using this option, such as required third-party counseling, reverse mortgages are gaining in popularity among retirees from all walks of life. A reverse mortgage for purchase option is available for those looking to purchase a new residence.

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.

A Quick Look At How A Reverse Mortgage Impacts Taxes

Posted on January 6, 2020 by janjordan

There are many differences between a reverse mortgage and a traditional mortgage – and taxes are a big one. Here’s a run down of what to expect come tax time if you have a reverse mortgage.

The Tax Liability Issue

Because any funds you receive from a reverse mortgage are essentially an advance on your home equity – equity you already own and have paid for, the IRS does not consider money received from a reverse mortgage as income, they consider it an advance, therefore it is not taxed as income. This is the case regardless of how you receive the funds – whether monthly installments, a line of credit, or a lump sum, you will never pay income tax on this.

What About Deductions on Interest?

Here’s one situation where there is a stark difference between a traditional mortgage and a reverse mortgage. With a traditional mortgage interest and fees paid are tax deductible every year they are paid. This is still the case with a reverse mortgage, except in the scenario of a reverse mortgage the interest is not paid until the loan comes due, therefore it cannot be claimed as a deduction until this point. The loan comes due if the borrowers sells the home, passes away, or permanently leaves the home.

Property Taxes

With a traditional mortgage, property taxes are often taken care of by an escrow service. With a reverse mortgage the homeowner is 100% responsible for making sure these property taxes are kept up to date. If there are financial concerns about the ongoing cost of property taxes, discuss this with your reverse mortgage specialist. There are options to help set aside a portion of the funds to cover ongoing expenses such as property taxes and homeowner’s insurance.

Jan Jordan is a Reverse Mortgage Specialist serving the Boulder, Longmont, Fort Collins, Loveland, Greeley, and Front Range areas of Colorado as well as Cheyenne and Laramie, Wyoming.

How To Use A Reverse Mortgage And Social Security Together

Posted on December 31, 2019January 6, 2020 by janjordan

When planning for retirement, there will no doubt be a discussion about when a retiree should start taking their Social Security benefits.

There are perks to delaying, for example Social Security benefits stand to increase as much as 7-8% per year if you don’t apply until age 70. But many seniors need this income. With the ability to apply for a reverse mortgage at the age of 62, and current low interest rates, retirees stand to actually make gains by using a reverse mortgage to supplement while delaying benefits.

When approved for a reverse mortgage, the borrower can choose from a variety of ways to access the funds. It could be a monthly installment, a lump sum, or even a line of credit that in itself stands to grow over time.

This is a creative way to use the hard earned equity in your home to your benefit. A well educated financial advisor would easily be able to help you decide if this is a good option. Reverse mortgages are available to seniors 62 and over, including married couples, with an approved type of home. The borrower will always retain the title to the home and reverse mortgages are insured by the FHA.

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.

Are Heirs Saddled With Reverse Mortgage Debt After Borrowers Pass Away?

Posted on December 17, 2019January 6, 2020 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.

HUD Increases Reverse Mortgage Loan Limits Beginning January 1, 2020

Posted on December 10, 2019 by janjordan

In early December, the Department of Housing and Urban Development (HUD) announced that the lending limit for FHA insured HECM Reverse Mortgages will be increasing for the fourth year in a row.

Beginning on January 1, 2020, the lending limit for government-insured reverse mortgages will be $765,600, marking an increase of $39,075 from the lending limit HUD set for 2019.

History of HECM Reverse Mortgage Lending Limits |
2009-2016 | $625,500
2017 | $636,150
2018 | $679,650
2019 | $726,525
2020 | $765,600

What These New Limits Mean for Borrowers

If you’re a prospective reverse mortgage borrower who has a home valued at or around the new 2020 lending limit, the new MCA will allow you to borrow demonstrably more money in a reverse mortgage transaction.

Remember, the amount of money you can borrow is directly influenced by current interest rates, your home value, and your age at the time that the loan is originated; younger borrowers qualify for generally lower proceeds when compared with older borrowers.

That means that these new limits can certainly make a major difference in the ability for borrowers to earn more money in loan proceeds.

Reverse mortgages are available to homeowners 62 and over, including married couples with many protections in place to ensure borrowers are adequately educated before using this option, such as required third-party counseling. Reverse mortgages are gaining in popularity among retirees from all walks of life. The funds can be received via line of credit, monthly payments, lump sum, or as a reverse mortgage for purchase for those looking to purchase a new residence. The funds can be used however the borrower deems fit – additional income, medical expenses, vacations, home repairs or modifications, gifts, etc.