But don’t get excited about this awesome news, because it’s only increasing 2% which on the average, will boost up benefits 20 to 25 bucks a month.
Just imagine how you could spend that extra money you will be receiving beginning in January of next year. Ummm, let’s see? I can think of a number of thrilling possibilities.
New tennis balls in lots of different colors for your Walker. Or extra money to blow at the Dollar Tree Store where one can find so many awesome deals, especially the junk from China.
Or maybe a couple cocktails at a Denny’s restaurant where you can get a Senior Discount when you order some of their nutritious food.
“Yes”, I am being sarcastic I know. But really only 2% increase?
I may look very youthful in my picture on this website, but I’m a senior too and if I wasn’t working I would be standing on a street corner begging for money and food.
I’m lucky however, because I enjoy being a Reverse Loan Consultant and meeting many wonderful and amazing people who are considering using the funds from a Reverse loan to pay for medical expenses ( I just had a partial knee replacement in August.), home improvement, care giving or maybe simply taking that long “talked about, one day we will go to Maui” and finally doing it.
The number one concern of everyone, but especially seniors is out-living their retirement funds ( If they have any) and not being able to afford to remain in their home for the rest of their lives.
But there is an option, a wonderful option and no one should be “scared” to look into the FHA government insured loan program just for seniors affectionately referred as the HECM.
Its smart to find out if you would benefit from it or not, plus it’s better than being reduced to groveling each month for enough money to pay on going expenses and staying awake at night in a state of fear.
Oh and by the way. I have a Reverse loan on my home that I used to pay off two mortgages I had at the time during the height of the Recession and Financial “crash”. So unlike the majority of any of my competitors, I’m qualified about the advantages of using the loan because of my own experience.
And I’m glad I did. It was a great decision at the time and I don’t regret it.
If I hadn’t taken advantage of using a Reverse mortgage for my own situation, I would have lost my home in a foreclosure as I was quickly running out of money.
In the last several days I have received quite a few panicky phone calls from people who are disparate to complete the counseling that is required by HUD prior to applying for a Reverse mortgage. And the counseling agencies are slammed with requests for appointments and will not be able to provide everyone an appointment immediately when they request one.
And the reason for the panic is due to the pending changes to the HECM program offered through FHA that will take effect on October 2nd.
The changes will be a reduction in the amount of funds to a borrower (Referred to as the Principal Limit) and will fall between 20% to 11% depending upon on the age of the youngest borrower.
And the Mortgage Insurance Premium (MIP) that is paid to FHA to insurance the loan will increase from .50% if the client is utilizing 60% or less of the money from the Reverse loan, to 2.00%
The reason behind these changes is to make sure that the Reverse loan HECM will continue to be an viable option for seniors and to be certain that the MIP pool of insurance will be well funded to cover any loans in the future in the event there is no equity left in the property at the time the loan becomes “due” at the death of the borrower(s).
The Mortgage Insurance Premium Fund will cover the “short” fall and it will not be the responsibility of the Estate to pay the entire balance in full if the property does not have enough equity to do so. And that is the main benefit of paying the MIP.
As of this writing and if you live in California, the latest you can complete your telephone counseling appointment would be tomorrow September 20th. because California requires a 7 day “cooling off” period before you can start the loan process.
I can take your application during this time, but I cannot start the loan process. We have to wait and then we would order a HUD Case # for the borrower and hopefully get it into the system no later than September 30th.
The calls that I have been getting are from people who procrastinated about whether or not to do a Reverse loan and they had months to think about it and now it’s frankly too late to start one.
I will have the new calculations for the pending changes, most likely by the end of the month if anyone wants to contact me about how much money they could receive after October 2nd. 2017.
Like “death and taxes” are a certainty and no one can avoid, you can be certain the HUD will always be “tweaking” the Reverse loan program and this will not be the last time that they will do it.
Just don’t procrastinate.
I mentioned in my last post that quite often I am asked why people apply for a reverse loan and what are the most common reasons.
In my previous post I spoke about a client who had been using her credit cards to pay for her “cost of living” expenses, because her Social Security income was too low to get her through each month.
However, the downside to using credit cards, is eventually you use all of the credit available on them, but still have an ongoing payment that now cannot be met.
You can read about Sylvia and how we managed to eliminate that debt and give her additional money each month from a reverse mortgage in the previous post.
My next example is Bonnie and Jim ( No last name for privacy reasons) who had had a major medical disaster destroy their lives. Medical emergencies are probably the number one reason for causing personal financial collapse as no one is prepared for the medical expenses that come with aging.
He had a great career in the movie studios as a transportation driver and life was quite good for them until he developed diabetes.
Unfortunately like so many men, Jim ignored it and continued to eat and drink whatever he wanted and did not take care of his health. Needless to say he became very ill and almost died resulting in the loss of both of his legs and kidneys to the disease.
He was no longer able to work and they quickly ran out of their savings to pay medical bills and their regular ongoing monthly expenses and used up all of the funds that were available on their credit cards leaving them in a terrible, crushing financial situation.
They owed the IRS money, all the credit cards and ended up doing a Chapter 13 Bankruptcy but somehow managed to continue to make their mortgage payments and ultimately repaid the money they owed to the IRS
I was referred to them by a CPA and in spite of the ugliness of their credit and the bankruptcy, I managed to get them approved for their reverse loan, relieving them of the burden of mortgage payments, plus additional funds that they were able to receive at the close of Escrow.
Making their life just a little bit better.
Jim and Bonnie are doing very well as of this writing and even though their credit had been ruined, I was still able to get them approved for their reverse loan and help them move forward and into better circumstances.
Reverse mortgage loan applications need the following documents from the borrower and it’s very important that they provide everything that is needed to process their loan in a timely manner.
How quickly a loan funds and closes mainly depends upon the borrower’s cooperation in providing whatever the lender as requested.
- Copy of photo I.D. Typically a current Driver’s License or a Passport
- Copy of Social Security Card or a Medicare Card
- Copy of Social Security Awards Benefit Letter. These are mailed out each December and show how much Social Security income will be received in the following year.
- (2) Months of checking acct statements ( All pages) to show SS deposits or any other payments such as a pension/retirement check.
- Most recent statement for any existing mortgage(s)
- Copy of Homeowners Insurance Declaration Page
- Complete copies of most recent quarterly statements for investments and or 2 months of bank statements. All pages.
- Copy of Trust if one is in place. The new loan will record in the name of the Trust.
- Name and Phone number for the management company if there is a Home Owners Association.
If the borrower is currently employed or receiving income from rental properties, the following items will also be required along with the list above this line.
- (2) Years Federal Tax Returns – All Schedules
- (2) Years W’2’s and any 1099’s
- Most recent Year-to-Date Pay Stub for the previous 30 days.
Yes, I know. It’s a lot of documentation and it’s very similar to what is needed for a traditional loan. However, it continues to quite easy to be approved for a Reverse loan compared other mortgages.
Plus, you won’t have any payments to make on it, so don’t be intimidated by this list.
If the reader has any questions about this or anything else about Reverse loans, please call me. I’m here to help you through the confusion.
In my last post I mentioned that I would start to share some of my clients’ reasons for applying for a Reverse loan and I think I will start out with one of my earliest clients, Sylvia K.
Needless to say, I will not be sharing their actual names due their right to privacy.
Sylvia was in her early 80’s and a widow for a number of years, but did not have enough income from her Social Security to meet her monthly expenses and she had run up large balances on her credit cards to pay them and now found herself without funds to make the payments and still have money for her utilities and food.
I remember meeting her on a very hot summer day in her home and all the windows where covered up in heavy drapes and it was dark inside and she didn’t have any air conditioning and sweat was running down my spine.
Oh yes….it was “hot” in her home.
A trusted friend and neighbor ( Brenda) was also there, much to my relief because Sylvia was a tough New Yorker and she of course didn’t trust me.
Why should she? She didn’t know me and I was to be treated with great suspicion.
Anyway, it was hotter then Hell in her living room as she “grilled’ me about Reverse loans and made sure that I knew she was one, smart gal and had been in the clothing industry in New York, a “professional” and couldn’t be taken advantage of.
And she was scared as well. Here she was, in her 80’s and out of money. And I really liked her feisty attitude and her three cats, too.
( After she passed away about two years later, I found out about the feral cat colony she was feeding in her back yard).
Brenda asked me questions about the FHA loan, gently encouraged Sylvia to be “nice” to me. ( And here’s the interesting part. Sylvia and I became friends and she used to send me cute note cards to my home address, telling me how she was doing and included the names of her three cats in her signature).
And “yes” she did her Reverse mortgage.
She received a Line-of-Credit, paid off the credit cards and had a comfortable amount of money leftover to use whenever she needed it for anything.
She called me one year after she had celebrated her birthday in Hawaii, just to chat with me and tell me all about the two Birthday parties she had, had and mentioned she wasn’t feeling too well. I said that she probably had “partied’ too much.
But as it turned out, I was the last person she spoke to as she quietly died later that morning at home in her bed and her neighbor Brenda ( Who checked up on Sylvia every day) called me and let me know that Sylvia had passed away.
And as I like to say “she lived life on her terms”and I was the last person she spoke to and I like to think that in the “end” she trusted me.