retirement

What About Social Security?

My previous two posts share information from a study that was completed this year by the Harris Poll for Northwestern Mutual to investigate how many Americans will be prepared to retire and what are their concerns about the possibility of outliving their funds?

Social Security provides an iota of money each month to seniors but certainly not enough to pay ongoing cost of living expenses, medical expenses or caregiving costs and if the senior doesn’t have a pension or other funds to use, what are they going to do?

New Study Underscores Retirees’ Need for Non-Traditional Funding Sources
Posted By Jason Oliva On June 7, 2016 @ 5:32 pm In News,Retirement,Reverse Mortgage

“Non-retirees also plan to rely upon Social Security less than their retired counterparts, with 35% of non-retired Americans expecting this benefit will be their sole or primary source of retirement income, compared to 49% of current retirees.

Social Security is often one of the main sources of income for people over age 65. But this stalwart asset, which has long been considered one of the three legs of the traditional retirement stool, may soon face depletion by 2034, according to the Security Board of Trustees for the Social Security Administration in a report submitted to Congress last summer.

But while there has been some talk that reverse mortgages could support the traditional retirement stool, joining Social Security and personal savings as defined benefit pensions become increasingly less common, the acceptance of using housing wealth as a retirement funding source is hobbled by a widespread apprehension to borrow against home equity.”

American seniors currently retain over 12 trillion dollars in home equity and honestly?   In spite of the fear and misunderstanding of the Reverse loan, it will come to the rescue for many seniors and their families.

They are now affordable, even a No Costs version is available, non taxable because it’s not income, they continue to own their home, it never goes to the “Bank” and its very, very safe.

But then again,  I am a Reverse Loan Consultant…..

 

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Confused About Reverse Loans?

I have been a Reverse Loan Consultant for almost 15 years and when I first started in this amazing and wonderful industry, the fees were very costly but that has changed over the last several years and the loan has become a terrific option to utilize one’s equity without being obligated to make mortgage payments each month.

My previous post was part of an article that I will share the remainder of here, but it discussed how much equity is in American seniors homes; well over $12 Trillion dollars and growing.

Seniors number 1 concern, is outliving their money.  Let’s face it.   No one can  live on Social Security and if one is fortunate enough to have a pension and investments, there is the concern about drawing down on them too soon and…

Running out of money.

A Reverse loan can eliminate that fear and worry and if a senior would get over their fear an bias about them, they will find out that they are very affordable.

As a matter of fact, I can offer a No Cost Reverse loan.    It just depends upon the size of the loan.

And the Title stays in their name or Trust AND THE BANK NEVER TAKES OVER THE PROPERTY.

Here is the remainder of the article that I’m carry over from the previous post.
The Street: Education is Key When Discussing Reverse Mortgages

September 5th, 2016 | by Alana Stramowski Published in News, Reverse Mortgage

There are some facts that homeowners need to know before taking out a reverse mortgage though. A small, but important detail that often is overlooked is the fact that the amount withdrawn during the initial year of taking out a reverse mortgage determines the mortgage insurance premium when the loan is closes.
The fees used to be extremely high, in some cases, but now, the Department of Housing and Urban Development (HUD) limits origination feed to just 2% of the first 200,000 of the maximum claim amount plus 1% of additional home value, but not exceeding at total of $6,000. according to the article.
Reverse mortgages can be extremely complicated for those homeowners taking a look for the first time, but with the proper education, they can see how the product could benefit them to support their overall retirement plan.
Read the full article on The Street.
Written by Alana Stramowski

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Seniors and Housing Debt

Although the amount of equity that is retained by American seniors exceeds 5 Trillion dollars, there are many who will not be able to retire because they are burdened with a mortgage payment.

Unfortunately, some seniors applied for Lines-of-Credit or did a traditional refinance on their property and took a lot of funds out at the close of escrow the last several years.

A much better option would have been to apply for the HECM Line-of-Credit and only use the funds as needed and not be obligated for a money mortgage payment.

A new report was recently published by HUD’s office of Policy Development and Research discussing this concern and what options seniors will have in the future to manage their housing debt.

I will post a summary of the findings in the next three posts.

HUD: Reverse Mortgages Provide Solution to Retirees’ Housing Needs

By Jason Oliva

“Baby Boomers and senior homeowners have the potential to reshape the nation’s housing market. But as a growing share of this demographic carries mortgage debt into retirement, they will need to seek additional solutions to improve their financial situations. For many, this could mean tapping into home equity through a reverse mortgage, according to a new report from the Department of Housing and Urban Development.

The broader housing market has shown positive signs of recovery in the years following the financial crisis, but several challenges remain, especially for older homeowners nearing retirement, according to a report recently issued by HUD’s Office of Policy Development and Research.

A rising percentage of older homeowners are carrying mortgage debt as they approach and enter retirement. Among owners aged 65 and older, 40% had mortgages in 2014, according to the Joint Center for Housing Studies of Harvard University.”

 

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HUD Counseling for Reverse Loans

One of the best resources for accurate information about Reverse mortgages is through a HUD approved counseling agency.

As a matter of fact, no one can apply for the loan without completing a counseling session which is typically done over the telephone in about one hour.

Once it’s completed the counselor will send a HUD Counseling Certificate to the individual(s) for them to keep and use if they decide to apply for the loan.

Here is a copy of an article that was published a couple of months ago with more details about this important resource.

“From an educational standpoint, Home Equity Conversion Mortgage (HECM) counselors are the first line of defense in the ongoing struggle to dispel the most common reverse mortgage myths and misconceptions.

Mandatory HECM counseling provides seniors with the necessary exposure to make an informed decision about getting a reverse mortgage. Like originators, the job of a HECM counselor is also rooted in education as they help prospective borrowers more clearly understand the inner workings of reverse mortgages.

Despite this dual effort on the educational front, and the wide variety of positive press from the mainstream media lately, several reverse mortgage illusions have yet to evaporate into the ether.

Borrowers, in fact, still own their homes

One of the most common misconceptions of reverse mortgages is that borrowers automatically relinquish ownership of their homes once they obtain a HECM.

Perhaps the result of negative media representation in the past, the lingering effect of this myth has obscured the truth about reverse mortgages among the general public. The reality is often a pleasant revelation for seniors once they undergo HECM counseling.

“Seniors are under this misconception that they don’t own the home anymore—the lender does,” said Sherry Tetreault, a Tenn.-based certified credit counselor with ClearPoint Credit Counseling.”

Jason Oliva/Reverse Mortgage Daily

Due to the fact that this article is quite long, I plan on sharing it in two additional posts here on my blog.

If anyone would like a list of some HUD approved counseling agencies, please contact me as there are several different ones to chose from, but the counseling process is uniform.

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Advisor Magazine

I have found it to be so encouraging in that Financial Advisers and the industry in general are beginning to use a Reverse mortgage as part of retirement planning.

Almost every day, there is another positive article or professional study about the FHA loan and the recent changes to it, that it not only safer, but much more affordable as well.  Plus the benefits of using it as part of a retirement plan.

Advisor Magazine published an article earlier this month, stating why Advisers need to become educated and open to their use in retirement planning for their clients who are near retirement, as a viable method of extending retirement funds.

The number 1 fear that just about everyone has, is running out of money as they age and unfortunately, far too many people are underfunded in their retirement plans and it’s important that Advisors are reasonably knowledgeable about the loan program, so that they may discuss it with their clients.

Having what could be called a “Stand By Reverse Loan” could possibly make a significant difference on how much money will be accessible  for a someone after they retire and possibly reduce the worry of running out of funds to support one’s self.

I’m going to share part of a summary article in this post, with the remainder of it in a follow up post, due to it’s length.   Plus I will also provide a link to the article itself in the event anyone one to read it in it’s entirety.

Advisor Magazine: Leverage Housing Wealth with Reverse Mortgages
Posted ByJason OlivaOn February 3, 2016 @ 6:54 pm In HECM,News,Retirement,Reverse Mortgage

“A slew of research and commentary in recent years have encouraged consumers as well as other financial professionals to take a fresh look at reverse mortgages, following the implementation of program changes such as the Financial Assessment, upfront draw limitations and updates to the non-borrowing spouse policy.

Furthermore, concerns that American retirees will fall woefully short of having enough savings to live on during retirement have also generated a keen interest among financial planners, retirement researchers and even a Nobel Laureate, to analyze how housing wealth could effectively fit into the equation for many retirees, according to the Advisor Magazine article written by reverse mortgage industry veteran Shelley Giordano.

Giordano, who also chairs the Funding Longevity Task Force, a group comprised of distinguished members of the financial planning community, writes that advisers who ignore the recent changes made to reverse mortgages “will fail to appreciate how the prudent use of housing wealth in the distribution phase can contribute to cash flow survival and even improve the overall bequest” for retirees and their heirs.”

An Asset Hiding in Plain Sight

Look for the remainder of the summary in my next post and be sure to contact me if you have any questions.

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