seniors

Seniors Seeking Additional Money

I have been sharing different ideas in my last couple of posts about the options for a senior if they want to borrower equity out of their home and whether or not they are a good or ideal solution to solve a financial problem or simply wanting extra funds to be available to them for any use.

I’m going to continue this discussion in this post and one more that will follow it in a few days.

In the last couple of days, I talked about the traditional HELOC, the one that every Bank offers to their customers and now  let’s pick up where I left off.

The HELOC will allow interest only payments for the first 5 years, but then will adjust to a much larger payment. Plus, the lender at any time can “freeze” the account and the funds in it will not be available to the borrower.

Too often the borrower is unaware that the loan will be “reset” in the future and if they no longer have the same income as they did when they initiated the transaction, they may not be able to afford the new and higher payment.

Sometimes a senior will use one of these loans for additional income to pay on going expenses, but obviously they will eventually run out of money in the HELOC and of course, will have mortgage payments for the term of the loan.

This can be disastrous for a senior and possibly result in them losing their home through foreclosure if they are unable to afford the payments.

The next possible choice, would be to do a traditional fixed rate 2nd Trust Deed. At least you will know what the payment will be each month, but again the borrower is obligating themselves to a mortgage payment for 15 years and they may not have the income in the future to continue comfortably making the payment each month.

And if they are a senior and or hoping and or planning to retire within a few years, will they be able to afford this obligation every, single month?

So would be the next choice?

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Seniors Don’t Want to Sell Their Homes

In my previous post I shared several reasons why seniors might use a Reverse loan and without being redundant, I won’t repeat those reasons in this one.

If a senior homeowner opts to sell their home and not use a Reverse loan for whatever their goals are, here is what must be taken into consideration.

  • Preparing their home for Listing and doing any necessary repairs and or “sprucing” up the property before it goes on the market.
  • The costs for whatever those repairs and cleaning up might be.
  • Agreeing on a Sales price and Broker fee  ( typically 6%) and entering into a Contract.
  • Allowing strangers to walk through your home that can be disruptive and annoying.
  • Cleaning out years of stuff that have accumulated over time and this can be quite “daunting”.

Now, that’s just the business side of selling a home, but what about the emotional and psychological component?

  • Leaving a home that you have loved for many years and is filled with a lifetime of memories.
  • Possibly leaving behind good neighbors, friends and a community that you are comfortable with.
  • Giving up connections to your Doctors and other professionals who’s services you use to assist with your life.
  • Leaving behind a part of “you” that is ingrained in your home and leaving that part of “you” behind for the rest of your life.
  • Grieving over this experience of leaving…..
  • And the serious question;   “Where will I live and how long will the money I receive from the sale of my home, last”?

Sometimes well meaning family members, think that this is the most logical solution for their senior parents.

But is it?

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Reverse Loans Improve Lives

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.

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Memories of a Grandmother and the Holidays

There is a lot of current news about Reverse loans and it’s all positive but I thought that given it’s Christmas and Hanukkah,  I would share a sweet memory about a Grandmother.

 
“I Wore My Grandmother’s Ring”

Written by Tami Podell

Assisted Living Connections – 818-357-1123

http://assistedlivingconnections.com

Yesterday, I wore my Grandmother’s ring. This may not seem very noteworthy. It’s a beautiful ring – old-fashioned, big and clunky.  I’m not a ring-wearer and for a wedding band, I normally wear a very light, slim band.

But on this day, I was inspired to wear Grandma’s ring because of memories that stirred within me while stirring my morning coffee.

When I was a child, rain or shine, we visited my Grandma Rosenbloom, my father’s mother. My father would be 94 years old today, and he and his brother were raised alone by my Grandma during the depression.

His mother was resourceful and taught her boys well, and he loved her and felt duty bound to her his entire life. Hence, the weekly Sunday visits to Grandma, who lived on Venice Beach in the Cadillac Hotel – a Senior Residence building of studio apartments.

Grandma was lucky to have a private bathroom and didn’t have to walk down the musty hallways to the communal bathroom.

This “hotel” had elevators reminiscent of old Alfred Hitchcock movies, and a
four story winding staircase with a very long drop down the center of the building, where my brothers and I used to look down and throw bits of paper or thread, watching the little bits take their long, floaty journey down the abyss.

My middle brother, Rick, would take me for walks to P.O.P ( I never knew that stood for Pacific Ocean Park ), an abandoned and spooky amusement park at that time.

We would cross the street to the newer apartment buildings, where there was a small convenience store in the lobby. My brother would buy me red  licorice or chocolates ( I loved the cherry-filled chocolates) and all of this was part of growing a very close bond as we grew up.

When we walked back to Grandma’s, I would lay down on her little single bed and fall asleep to the murmur of all the chatter and discussion going on in her small apartment.

I remember the warmth and fragrant smells of my father’s cooking onions and eggs to eat with bagels, lox and cream cheese.

When the dishes were all cleaned and dried and I had awoken, Grandma would put on her wool overcoat ( it could be August- it didn’t matter ), and come downstairs and outside to the beachfront boardwalk.

All the older people were sitting on benches wrapped in their coats, jackets and scarves while the young people whizzed past on their roller blades with thrumming music, drums and wearing bikinis ( this WAS the ‘60’s – the age of psychedelics.)

While I didn’t always look forward to going to Grandma’s… I didn’t enjoy those big, smoochy, lip-sticked kisses on my little face…. those days come back to me as happy memories.

And after my Grandmother’s passing, I somehow always felt like her spirit was especially watching out for me.

As a grown-up, I believe that this may really be true. Grandma never really shared her “Spirituality” with me, but from my older brother, I know that it was there – privately – just like mine.  And I believe it makes a difference and is transmitted – the prayers reaching through generations.

My husband and I have joked about our lack of religious upbringing, he kidding around about how there was a ham at one end and a challah at the other end of the table during the Passover Seder.  My retort, “at least you had a Passover Seder.”

But now, being connected to my roots is one of the most important aspects of my life. And I believe it may have happened because of my Grandma’s private prayers.

I feel like I am strengthened by the hardships and resilience of both my immediate ancestors, as well as, my very distant ancestors.

One example of growth through adversity would be the story of my father  looking for food and finding empty cupboards as a child.

Yet on Fridays, he was always sent down to the butcher to get two chickens – one whole chicken each for himself and his brother for their special Friday night dinner.

(As for my “distant ancestors”, our forefathers and foremothers for all their lives had challenges that developed and demonstrated their character. Hopefully, they have passed along their ‘spiritual DNA.”  )

I could go on and on, but in short, these memories bring to mind how important it is that in this fast-paced world, where we live in a society where everything is disposable and/or becomes obsolete, it is important to stay connected to our parents and grandparents.

We are all connected and each of us is a link from the past to the future.  Rich traditions and rituals like Sunday visits to ‘Grandma on the beach’ create an anchor rooted in feeling loved and protected, and that provides us with the strength and faith to move forward and believe in ourselves to face the challenges in life.

It gives us the endurance to pass this sort of unselfish commitment to our children and hopefully to our grandchildren as well.

This is family, and this is what builds up a society.

So, posthumously, “ Thanks Dad for always making us go visit Grandma every Sunday.”

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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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