Category: Retirement

Why The Reverse Mortgage Line Of Credit Is So Unique

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 Erie, Firestone, Fort Lupton, 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 Counseling: What To Expect

Posted on by janjordan

Reverse Mortgage Loveland Fort Collins Denver Boulder Longmont Greeley ColoradoPrior 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.

Here is what you can expect at your counseling session:

The potential borrower will need to schedule an appointment directly with a counseling agency. The lender does not initiate or take part in the session, but can provide you with resources to seek out a counselor. The session will take place in person or over the phone – although the FHA recommends a face-to-face meeting whenever possible.

Prior to your appointment, the counseling agency will provide you with a packet of information to allow you to prepare for the session. During the session the counselor will discuss your immediate and long-term financial needs, your reasons for seeking out a reverse mortgage, address any questions or concerns you may have, and clearly educate you on the process as well as the pros and cons of a reverse mortgage. Again, they are not there to “sell” you on the product, but to educate instead.

Once you have completed the counseling session, you will be provided with a “Certificate of Completion”. This certificate verifies to your lender that you have completed the counseling session and that you understand the essentials of a reverse mortgage. Your counselor will also follow up with you to ensure you have no further needs, questions, or concerns.

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 to learn if reverse mortgage is right for you.

How Reverse Mortgage Perception Has Shifted And What It Means For Borrowers

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoSince the reverse mortgage industry saw big changes in 2015 then again in 2017, financial advisers, retirement planners, and reverse mortgage specialists are collaborating more than ever before.  In an effort to ensure these changes are are thoroughly understood and appropriate solutions are offered to clients, a strong relationship between professionals is vitally important.

Because of these newly developed relationships, it appears a wonderful shift is taking place.  Reverse mortgage, once stereotyped as a product for poverty stricken widows or the like, is now being realized as a product of opportunity.  More and more we’re seeing affluent and middle class retirees utilizing this option to provide financial stability and financial freedom throughout retirement.  The industry has only begun to scratch the surface of those who would benefit or will discover the possibilities when tying a reverse mortgage into their retirement plans.

This paradigm shift will likely increase knowledge across the board regarding both traditional reverse mortgage loans and the reverse mortgage for purchase program.  Both products are available for seniors 62 and over.

If you have any questions regarding the changes that have taken place surrounding the reverse mortgage industry in Colorado, please don’t hesitate to contact me.

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..

The Reverse Mortgage Solution To Divorce Disputes

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont coloradoIt’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 last 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, and Front Range areas of Colorado.  Click here to contact Jan and learn if reverse mortgage is right for you.

Reverse Mortgage Funds Aren’t Just For Emergencies

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoOne of the best parts of a reverse mortgage is the borrower(s) can do anything they’d like with the funds – while also living mortgage payment free.  In Colorado, seniors are more active than ever, whether it be traveling, home improvements, or visiting with family and grandchildren often.  As several Colorado cities always make the list of the best cities to retire (including Fort Collins & Loveland in this survey and Firestone, Parker & Louisville in this one) there couldn’t be a better time or place to enjoy life.

Here are 3 fulfilling ways seniors are using their reverse mortgage funds:

Take that trip they always dreamed of – After years of working hard, saving for retirement, and raising a family, some reverse mortgage borrowers are using a portion of their funds to take the bucket list vacation they’ve always dreamed of.  This option becomes less probable as they age and makes for a fantastic celebration by the more active seniors.

Visit with loved ones – Whether it’s a sister who hasn’t visited in 10 years, or children and grandchildren, or long lost friends, using reverse mortgage funds to visit with loved ones is a very common today.  Travel can be expensive and it holds us back far too often from the visits that mean the most to us, especially as we age.

Make home repairs or upgrades – After a life of caring for others, senior homeowners often find parts of their home may have been neglected.  When using a reverse mortgage to tap into home equity without a subsequent loan payment borrowers often make those repairs or upgrades they have been longing for.  Whether it’s a sunroom addition or a kitchen remodel, or just dutiful repairs, this is never a bad option.

Reverse mortgages are available to homeowners 62 and over.  This FHA insured loan offers funds through a lump sum, monthly installments, or a line of credit and eliminates monthly mortgage payments.  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.  And 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.  Click here to contact Jan and learn if reverse mortgage is right for you.

Breaking Down The Costs Of A Reverse Mortgage In Colorado

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoOver the years reverse mortgages have shifted from being a choice of last resort to a creative and effective retirement planning tool. But still many who do not fully understand how reverse mortgages function will immediately bring up the perceived high cost of originating the loan. 

When all costs and variable options are considered, the opposite is true. Reverse mortgages actually cost considerably less when used as a source of income when compared to a portfolio or continuing to make payments from a portfolio after the age of 62. They also allow for financial freedom during some of the most important and valuable times in life.

Let’s start by looking at the actual costs. People are generally familiar with the costs that come with a traditional forward mortgage.  They do vary by state but consist of lender fees, third party fees like appraisals and title costs, origination fees, PMI and other miscellaneous costs. 

All of those are similar to a reverse mortgage with the exception of one difference: Mortgage Insurance Premium (MIP). This is a 2% fee based on the home value which goes to the FHA to insure the loan.

So, what does that insurance fee get you?  Why is it required? 

In the case of a traditional forward mortgage, insurance encourages the lender to lend to a borrower with a lower credit score or a small down payment so they are insured by the mortgage insurance company if there is a default.  Reverse MIP is much more powerful than forward PMI.  It not only insures the lender, but also the borrower AND the borrower’s heirs.  The reverse mortgage is a non-recourse loan that requires no payments until the borrower passes away or moves out of the home permanently.  That’s a solid guarantee.

As we’ve seen the past few years here in Colorado, home values continue to rise.  And just as we’ve seen before, that’s not guaranteed to continue forever. No one really knows what the home value will be next year or a decade from now. With this MIP, the borrower can live a very long life, and even if the home value plummets, if the balance on the loan is more than the value of the house, the MIP fund pays out the loss to the lender. The borrower, or the borrowers’ heirs, will never be responsible for any negative gap between loan balance and home value or any tax liability. 

Additionally, it’s very common that there is equity left over to pass on to the children because the home value has increased faster than the loan balance. In this case, even with the FHA insured loan, the heirs will always receive any equity in the home. 

Now how do you calculate these additional costs into a financial portfolio? Let’s look at some ways a reverse mortgage can be used.

The first factor is often also the biggest benefit – eliminating a mortgage payment so that cash flow is freed up to invest or use for other purposes.  Currently 44% of seniors reaching the age of 62 are still making a mortgage payment.  Most can afford it, but it needs to be asked if this is the best use for the money.

The second factor to consider is for those who are wealthy and have what one would consider “plenty of money” with homes that are already paid off. These people still have a cost of living, and often it is high.  The funds to maintain their lifestyles has to come from somewhere, whether passive or active income.  A reverse mortgage just acts as another source of income, and it is often the most efficient and cheapest income available to someone past 62.  Advisors can keep their senior clients fully invested in longer term portfolios while maintaining a cash reserve in the reverse mortgage line of credit. And that line of credit is guaranteed never to be cancelled or closed as long as the borrower meets their basic responsibilities such as paying homeowners insurance, taxes, and other basic fees such as HOA. It also requires no payments and is guaranteed to increase every year that goes by even if the house value does not.

And the third factor is quality of life.  As these individuals plan for the rest of their lives in a way only retirees do, the answer isn’t always calculated in dollars and cents, it’s calculated in time spent vacationing with grandchildren and creating memories with friends and spouses. This particular return on investment should never be overlooked.

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.

Social Security Is On Track To See The Highest Increase In 40 Years

Posted on by janjordan

The Social Security Administration is responding to the highest inflation rates in 40 years with what’s expected to be the biggest cost-of-living raise in decades.

According to Fortune:

Social Security checks increased by 5.9% this year relative to last, one of the biggest boosts retirees had seen in some time. And with inflation still sky-high — the consumer price index jumped 8.5% in March — they may get an even bigger increase next year.

The 2023 cost-of-living adjustment, or COLA, could be as high as 8.9%, according to a preliminary analysis released Tuesday from the Senior Citizens League, a nonpartisan seniors’ advocacy group. It’s possible it could climb even higher than that, depending on what happens with inflation in the next few months, says Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League.

The official Social Security COLA will be announced in October, which means there is still six months’ worth of economic data to be taken into consideration before it is finalized.

“I have never witnessed inflation this high,” Johnson says. The Social Security COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a more general inflation measure than the headline Consumer Price Index for all Urban Consumers, or CPI-U. The CPI-W weights clothing, food, and transportation costs more heavily than the CPI-U.

The COLA was just 1.3% in 2021, and raised Social Security Income by an average of about $20 per month. This year, the average retiree’s checks are $92 bigger each month, says Johnson.

Though inflation is hard on all consumers, it is particularly painful for retirees who live on a fixed monthly income. Johnson points out that though 2022 and 2023 are likely to see record increases, they won’t be able to make up for years of increases that averaged around just 1.4%.

Social Security used to make up just one part of the typical senior’s retirement income, in addition to pensions and workplace savings. Pensions are rare these days, Johnson notes, and many people are not saving enough for retirement on their own, many because they cannot afford to do so.

“Because they’re not working, they have to have a good savings plan and emergency savings” to fall back on, she says. “But our brains are not wired to think long-term like that.”

Reverse mortgages are an excellent tool to help balance the uncertainty of retirement funding, whether by cushioning investments in a volatile market or delaying Social Security benefits. 

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.

How A Reverse Mortgage Can Help With Divorce

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont coloradoIt’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 last 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, and Front Range areas of Colorado.  Click here to contact Jan and learn if reverse mortgage is right for you.

The Reverse Mortgage Line Of Credit HECM-LOC Is Highly Unique And Here’s Why

Posted on by janjordan

Reverse Mortgage for Purchase Loveland Fort Collins Greeley Longmont Westminster Colorado Cheyenne Laramie WyomingThe 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 Erie, Firestone, Fort Lupton, 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.

Find A Reputable Reverse Mortgage Lender In Colorado

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoFor 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.