reverse loans

Paperwork Needed for a Reverse Loan

I actually discussed this in a previous post, but to change it up a bit and make it more interesting, I created a short video with terrific music that makes it pretty simple to understand what kind of documents are needed from a borrower.

Of course, depending on their personal situation other items might be needed, especially if the borrower is still working, then pay check stubs and W2’s would be needed and any phone numbers for management companies if the borrower lives in a Condo.

Which is always a good idea, but for whatever it’s worth here is the video.

And please….do call me if you have any questions.

 

 

Continue Reading

Why Do a Reverse Loan?

I have been a Reverse mortgage consultant for almost 20 years and quite often, I am asked why would anyone ever use a reverse loan?

It’s certainly a reasonable question, but most of the time, it’s coming from a  place of lack of correct information about the FHA HECM loan program for seniors and too often the “stories” and myths they have heard about reverse loans.

Initially when I first started in this profession, the most common reason for applying for it, was the need for additional funds to simply pay on going monthly expenses.   Needless to say, the amount of money seniors receive from Social Security are woefully inadequate to pay mortgage payments   ( if they still have a mortgage), food, utilities, medical expenses and the plethora of costs we all have each month.

In my next several posts, I’m going to talk a bit about the loan and how it’s become more affordable and other misconceptions that are still circulating in the public about it.

And I will share some stories about some of my clients   ( Without naming them), as to why they chose to use a Reverse loan in their particular situation.

And…. no one has ever regretted their decision.

Continue Reading

How to Qualify for a Reverse Loan

In my previous two posts, I discussed the new Underwriting procedures for qualifying for a Reverse loan and I don’t want anyone to become too concerned or afraid that they would not be able to get one if their income is low or they have some negative credit on their credit report.

The loan has never been Underwritten using FICO scores or “debt to income” ratios and that is still the case.

As long as you are at least 62 years of age and live in your property, you are eligible for the FHA loan that is only offered to seniors.

I don’t want to repeat myself here in this post about the documentation that the borrower will need to provide to the Loan Officer or discuss the Financial Assessment or the LESA but I want to explain how you can still be approved.

(Please look at my previous post that lists the items that you might have to provide to the Lender.   Not all of them are necessary depending upon your particular sources for income, etc.)

But the borrower will need to be prepared to provide more documentation than in the past and a letter of explanation if they have any derogatory credit and or have been  late on their property taxes, etc.

I have had clients who were essentially not a good risk to the Lender because they were clearly irresponsible when it came to making their obligatory housing expenses AND they had some “shaky” credit as well.

With the cooperation of my clients, I was able to write an excellent Letter of Explanation for them and they were not required to have a LESA set up for their loan.

However, a LESA can provide the client the peace of mind that their property taxes, homeowners insurance and any HOA fees will always be paid from the LESA account and with not having a mortgage payment on a reverse loan is a benefit to the borrower.

Plus, if for any reason the borrower’s income declines in the future, they will never have to worry about how to make any of their housing expenses, as the LESA account will automatically do it for them.

And they can feel secure living in their home.

Please feel free to call me if you have any questions about The Life Expectancy Set Aside and or would like to know approximately how much money you could receive from a reverse loan.

Continue Reading

Seniors with Mortgage Payments

In my previous post I discussed the serious issue of the number of seniors in the United States who still have a mortgage on their home and may have difficulties paying for it.

If they are still employed, the may not be able to afford to retire because of their mortgage payment that they are obligated to pay each month.

Certainly a Reverse loan is the better option, since the homeowner is not required to make any payments and it will allow them to manage their retirement savings to last longer if they are  not drawing down on their funds.

Here is the second part of the article that summarizes a report that was published recently by HUD’s Office of Policy Development and Research.

Written by Jason Oliva

“The implications of carrying housing debt into retirement years are severe. Not only may these homeowners have to postpone retirement or make difficult decisions regarding lifestyle spending on food, medical care and other expenses, but carrying debt also weakens their ability to draw on home equity to supplement their income as they age.

Refinancing options and reverse mortgages, HUD writes, may be appropriate for some older homeowners with mortgage debt, and financial counseling and assistance programs can provide help to those facing financial hardship.

“Older homeowners might draw on their home’s equity to fund modifications that allow them to age in place, help pay for their children’s or grandchildren’s education, or pay medical expenses—and as long as they have the resources to make loan payments, they can reasonably carry mortgage debt,” HUD writes.”

I will share the reminder of the article in my next Post.

Continue Reading

Retirement Income Certified Professional

This is a rather long title for a new designation for Financial planners, but apparently many of them are seeking to become educated on how to use a reverse loan for retirement planning.

Needless to say, many Advisors refuse to acknowledge the benefits of using funds from a reverse loan, instead of drawing down on a retirement portfolio, but more are becoming open to the suggestion that there are benefits to be had to their clients by using this option.

And article was recently published discussing this new certification and how quickly many financial advisors are undergoing the education to qualify for it’s designation that will “brand” them as current on financial matter and innovative and open to new ideas in retirement planning.

Program Teaches Financial Planners Strategic Use of Reverse Mortgages.

May 20, 2015

A growing number of financial advisors have looked to new designation programs to better guide retirees on how to plan for retirement.

One such program, which teaches advisors about the strategic use of reverse mortgages, has grown in popularity since springing up three years ago — perhaps because of its uniqueness.

The Retirement Income Certified Professional (RICP) designation became the fastest-growing financial advisor credential ever launched in The American College of Financial Services’ 88-year history, according to a recent article on ThinkAdvisor, which notes that some 1,500 financial planners have completed the program, and another 7,000 are currently enrolled.

“The program was designed specifically to address retirement income planning,” said David A. Littell, RICP Retirement Income program director at The New York Center for Retirement Income at the college. “We thought that was what advisors needed. That is what they were asking for. That is what the industry was looking for.”

 

Written by Emily Study

I will post the remainder of the article tomorrow.

Continue Reading