Category: Retirement

How to Use a Reverse Mortgage to Eliminate a Traditional Mortgage

Posted on by janjordan

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 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.

What To Know About The Reverse Mortgage Line of Credit (HECM-LOC)

Posted on by janjordan

A reverse mortgage line of credit is a financial product designed for homeowners who are at least 62 years old and have significant equity in their homes. It allows them to access a portion of their home’s value without having to sell the property or make monthly mortgage payments.

Here’s how a reverse mortgage line of credit typically works:

  1. Eligibility: To qualify for a reverse mortgage line of credit, you must meet certain criteria, including age requirements and home equity. You need to be at least 62 years old, own your home outright or have a considerable amount of equity in it, and reside in the property as your primary residence. 
  2. Application and Counseling: You’ll need to apply for a reverse mortgage through a lender approved by the Federal Housing Administration (FHA). As part of the process, you’ll be required to attend counseling to ensure you understand the terms and implications of the loan. 
  3. Loan Calculation: The amount you can borrow is determined based on several factors, including your age, the appraised value of your home, and current interest rates. The older you are and the more valuable your home, the larger the potential loan amount. 
  4. Line of Credit: Instead of receiving a lump sum, a reverse mortgage line of credit provides you with a pool of funds that you can access as needed. This line of credit can grow over time, allowing you to access more funds in the future. The unused portion of the line of credit can also earn interest, which increases the available funds. 
  5. Repayment: The outstanding loan balance, including any accrued interest, becomes due when you sell the home, move out permanently, or pass away. Typically, the home is sold, and the proceeds are used to repay the loan, but because these loans are FHA-backed, no one will ever owe more than the home is worth at the time the loan comes due. If the sale proceeds exceed the loan balance, the remaining amount goes to you or your estate. 
  6. Flexibility and Payments: One advantage of a reverse mortgage line of credit is that you have the flexibility to choose when and how much to borrow. You can access funds at any time, and you’re not required to make monthly mortgage payments. However, you must continue to pay property taxes, homeowner’s insurance, and maintain the property. 
  7. Interest and Costs: Like any loan, a reverse mortgage line of credit accrues interest over time. The interest rate may be fixed or adjustable, depending on the terms of the loan. Additionally, there are upfront costs involved, such as origination fees, closing costs, and mortgage insurance premiums.

It’s important to note that while a reverse mortgage line of credit can provide financial flexibility for seniors, it’s crucial to work with a reputable lender to ensure you thoroughly understand the terms. 

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 Kelsey to learn if a reverse mortgage is right for you.

A Different Look At Retirement Today

Posted on by janjordan

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

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

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

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

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

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

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

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 Line Of Credit Explained

Posted on 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.

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.

Are Reverse Mortgages An Under Utilized Resource?

Posted on by janjordan

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. 

How A Reverse Mortgage And Social Security Can Work Together

Posted on by janjordan

Reverse Mortgage for Purchase Loveland Fort Collins Greeley Longmont Westminster Colorado Cheyenne Laramie WyomingWhen 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.

Is A Retirement Crisis Looming?

Posted on by janjordan

Numbers are being released showing that the impending retirement crisis may be worse than originally thought.

Half of Americans have less than $10,000 in savings.  Nearly half of the oldest Baby Boomer generation have insufficient resources to pay for basic retirement living expenses and healthcare costs.

The Center for Retirement Research at Boston College estimates that our “retirement income deficit” is $6.6 trillion. That number represents the gap between pension and retirement savings that American households have today and what they should have to maintain their standard of living in retirement.

Over 6 million American seniors are living in poverty.  This number is expected to grow by 33% in coming years.

These stats are concerning not only for the retirees, but also their families. A reverse mortgage can help by becoming an important piece of retirement planning. Seniors 62 years and older now have the ability to fund their retirement using the equity in their homes, alleviating mortgage payments, and receiving either a line of credit, monthly installments, or occasionally a lump sum.  These funds are not taxable as income, and will continue for as long as the borrower remains in the residence. 

For many, this option makes a world of difference, allowing for the sought after prosperous retirement years instead of barely scraping by on a budget. And the reverse mortgage funds can be used for any purpose the borrower chooses, and is often used to help with every day expenses or long term medical costs.

Jan Jordan is a Reverse Mortgage Specialist serving the Erie, Lafayette, Fort Lupton, Dacono, 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 Vet A Reverse Mortgage Lender

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoUsing a reputable reverse mortgage lender is crucial for anyone considering a reverse mortgage, as it can greatly affect the borrower’s financial well-being and peace of mind. A reverse mortgage is a serious financial product and working with a reputable lender can help ensure that the borrower fully understands the terms and risks involved.

Here are some reasons why it’s important to use a reputable reverse mortgage lender:

  1. Avoiding scams: Unfortunately, there are many scams and unscrupulous lenders in the reverse mortgage industry. Working with a reputable lender can help protect the borrower from fraud and predatory lending practices.
  2. Clear and transparent terms: A reputable lender will provide clear and transparent information about the terms and costs of the reverse mortgage. This includes the interest rate, fees, and repayment terms, as well as the borrower’s obligations and responsibilities.
  3. Education and guidance: A reputable lender will provide education and guidance to the borrower, helping them understand the pros and cons of a reverse mortgage and how it fits into their overall financial plan. This can include counseling and education from an independent third-party counselor.
  4. Compliance with regulations: A reputable lender will comply with all applicable regulations and laws related to reverse mortgages. This includes following guidelines from the Department of Housing and Urban Development (HUD) and other regulatory agencies.
  5. Customer service: A reputable lender will provide excellent customer service, answering questions and concerns promptly and professionally. This can help the borrower feel more comfortable and confident throughout the process.

In short, working with a reputable reverse mortgage lender can help ensure that the borrower is making an informed decision and is protected from fraud and predatory lending practices. It can also provide peace of mind and a better overall experience throughout the process. When considering a reverse mortgage, it’s important to do your research and choose a reputable lender with a track record of excellent service and transparency.

Reverse mortgages are available to individuals and married couples aged 62 and over. 

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.

What’s So Great About a Reverse Mortgage Line of Credit?

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoThe 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?

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.

As Gray Divorce Rates Are Climbing A Reverse Mortgage May Help

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont coloradoA new research poll highlighted a very interesting trend among divorce in the United States – while divorce rates have drastically declined among younger adults, it’s nearly doubled among adults 50 and over in the past 25 years. 

The truth is, it’s becoming more and more common for seniors to divorce after retirement.  This is happening for various reasons, but a big one is that retirement now lasts for decades versus only years, and many people are looking to make those golden years the best yet.

But senior divorces can get messy, as there are often many assets to sort out.  During divorce negotiations, a home is often one of these assets.  This home is possibly owned free and clear, or with a lot of equity.  For divorcees age 62 and over, a reverse mortgage can be used as a tool to help with settling this asset during divorce.  The great thing about reverse mortgage is it allows someone to stay in the home and live mortgage payment free, AND access funds from the equity.  Here are a couple scenarios in which reverse mortgage would be of benefit.

Scenario 1: When splitting the home asset, instead of selling the home, one party could be allowed to stay in the home and obtain a reverse mortgage, of which the other party receives the funds from.  This can be a win-win.  In cases like this, the financial settlement can even be wrapped into the loan if the divorce is final before the closing.  This would mean a reverse mortgage would be part of the divorce settlement discussion.  It is important to understand that the party that remains in the home will be responsible for certain obligations pertaining to the home, such as property taxes and homeowners insurance.

Scenario 2: Possibly you’re used to living off two incomes – whether it be from work, or social security and pensions.  Suddenly dropping down to one income can be devastating.  In cases like this getting the home in divorce proceedings can be a huge benefit, as once the divorce is final, a reverse mortgage could be obtained on the home.  The funds could come in monthly installments, a line of credit (that grows), or a lump sum.  In addition, if you wanted to sell the home and move, a reverse mortgage could be used to purchase the new home – and can even allow you seek homes that would otherwise not be in your price range.  The best part?  You will always live mortgage payment free.

If you are considering a divorce, or sifting through the process, don’t hesitate to contact me to further understand how reverse mortgage can help, and whether or not you qualify.

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.