retirement funds

Reverse Mortgages and Annuities

An annuity should never be purchased using money from a reverse loan, but in the past there were times when a reverse loan borrower would unwisely do just that and sometimes these vulnerable seniors were (for lack of a less sensitive term) “robbed”.

But what has happened since then to protect seniors from this kind of scam?

In 1987 Congress passed the FHA Insurance and Uniform Lending practices and the FHA insurance bill that would insure Reverse mortgages.

The first reverse mortgage to be insured by FHA was in 1989 and they continue to oversee this program very closely as an added protection to seniors and since that time additional oversight has come from Housing & Economic Recovery Act, HUD, Ginnie Mae, the National Reverse Lenders Association and the Consumer Financial Protection Bureau.

Prior to this time, reverse loans were created and offered by other entities  such as insurance companies in exchange for a portion of the equity of the borrower’s home when they passed away and at very high interest rates.

And quite often an annuity was tied to this transaction by obligating the borrower to use the funds from the reverse loan to purchase  this insurance product.

Is this an acceptable suggestion for a senior to utilize in their “later” years?

 

Continue Reading

Reverse Loans and Divorcing

In my previous post I mentioned that since the 1990’s, “Gray” divorce  ( As senior divorce is often referred to) has increased.   As a matter of fact it has tripled and more seniors are splitting up than in any previous time.

More often than not, the “wife” will want to continue to live in the home but is unable to qualify for a traditional loan due to lack of income and cash reserves.

So what happens if one of them wants to keep the home and continue to live in it?

More than likely they won’t have enough income to qualify for a traditional loan and even if they are going to receive spousal support, a lender will not use it for qualifying purposes because there will be no history of it’s receipt to the spouse who has been awarded support.

And what would be her option?

Depending on her age, the value of the subject property and if there are any mortgages on it, she may be able to qualify for a reverse mortgage, pay off the spouse and continue to live in her home.

Her only responsibilities would be to continue to pay property taxes, home insurance and any HOA fees and keep the home in good repair.

Reverse loans are a financial tool.  A tool to leverage the longevity of a retirement portfolio, purchase a home, provide additional income for on going expenses and other aging concerns.

And it’s also an excellent tool that can help the pain of divorce be just a little bit less and allow one of the divorcing couples to remain living in their home and not be displaced.

My description is quite simplistic in this post and the borrower does need to qualify on their residual income, but overall using a Reverse mortgage as part an option to retain the property in a divorce is a very good suggestion and should be considered in the settlement process.

 

Continue Reading

Reverse Mortgage Misconceptions

In my previous post, I discussed the negative image of the Reverse loan and where it came from and how we in the industry, are still plagued by this perception that is no longer true.

In spite of the amount of television ads and the many qualified resources for accurate information about the FHA loan program, there are still many people that continue to believe that they are a terrible option for a senior to use to access their equity.

Not true.

And I have to wonder how many seniors chose not to take advantage of the HECM program when it would clearly benefit them, due to their fear and lack of credible information.

I do not work for a BIG Lender, I am employed by a Broker and I work independently from my home office and I always, always meet potential clients personally in-their-homes.

I do not advertise and neither does my Broker and I conduct my business 100% referral based.   From former clients, Bankers, Trust and Elder Law attorneys and Financial Advisors.  I have built relationships with them over the course of many years and they know that they can trust me to take excellent care of their clients.

That is how I transform mistrust and lack of credibility.  And most importantly, I do not pester them to apply for the loan.  It takes time to make a decision and it has to be the best one for the client.  Not me.

However, an excellent resource for information that is accurate and correct is to chose one of the HUD Counseling agencies and request a telephone appointment for Reverse loan counseling.   They generally charge between $125 to $150 for an hour session, but it’s worth it and will give a person a better grasp of the loan and how it may or may not benefit them.

Here is a link to HUD for a list of approved counseling agencies.

https://www.hud.gov/program_offices/housing/sfh/hecm/hecmlist

So “whatever you have heard”, don’t believe your neighbor, friend, hairdresser, financial advisor or anyone that is not qualified or knowledgeable about Reverse mortgages.

Because they simply do not know anything.

Only “what they have heard”.

 

Continue Reading

Social Security is Increasing for 2018

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.

Whew!

 

Continue Reading

How to Retire Using a Reverse Loan

I have been a Reverse Loan Consultant for almost 17 years and until the last five or so of them, most articles that discussed reverse loans and media pieces were not only incorrect but very negative and certainly created the wrong impression and more than likely, turned off a number of seniors who could have benefited from using  it to provide additional income.

However, we in the reverse loan industry have seen quite an “about face” in the last few years and more and more positive and encouraging articles and media news are promoting the benefits of the FHA HECM reverse loans to the public.

After taking a “beating” for too many years, each day seems to have another article or something on the news that not only is more often correct than it was in the past, but is seriously letting people know that a reverse loan is a good option to use in lieu of drawing down on a retirement fund.

In particular, the Boston College Center for Retirement Research has published a number of studies over the last few years, pointing out the reasons why seniors should not rule out using a reverse mortgage as part of their retirement plan.

And just recently they published a new report addressing the reasons why some seniors are resistant to the idea of using their equity in their home to sustain their lifestyle and to pay for any unplanned medical expenses and that their reasons are not “rational”.

I’m going to share a summary of their findings in the next few posts.

Continue Reading