May 2014

CNN Article About Reverse Loans

I am sharing a brief summary of an article that was recently published by CNN about why more financial advisors are reconsidering the FHA loan as an option to extend retirement funds.

Overall, the article is good but it does make a mistake in regards to Closing Costs that I discussed in a previous post.

The Origination fee CAN be  as much as $6,000 but depending upon which loan program is used and the interest rate associated with it, the fee drops and in some cases the borrower can receive a credit towards the fee.  Reducing the Closing Costs overall.

CNN Money: Reverse Mortgages Poised to Be Mainstream Strategy

Posted By Jason Oliva On May 20, 2014 @ 4:25 pm In News,Retirement,Reverse Mortgage |

“Reverse mortgages, what were once considered options of last resort, are now poised to become a mainstream financial strategy for older adults looking to shore up their retirements, reports CNN Money in a recent article [1].

Now that reverse mortgages have undergone a variety of program changes, financial services companies are aiming to make these loans more appealing to consumers, with some advisors even touting them as standby credit.


‘“Home equity is key to Americans’ retirement security, so it’s crucial to responsibly offer reverse mortgages,” said Christopher Mayer, a Columbia Business School professor and CEO of Longbridge Financial, in the article.

The article also encourages readers to weigh the costs of reverse mortgages, among other considerations, to determine if these loans are a good fit for one’s own financial situation. ”



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Here is the remainder of the article that discusses the recommendations that a federally created commission found in determining how to manage the pending financial crisis as American age.

The average person thinks that Medicare will take care of the costs for long-term care, but it doesn’t.   And without a large savings or retirement or Long-Term Care insurance, they will have no resources to draw upon.

Plus most programs that were state or federal have been eliminated due to budget issues and many families will be at a loss on how to pay for these costs.

The obvious solution, will be to use funds from a Reverse loan.

Here is the last part of the article.

Committee Touts Reverse Mortgages Among Solutions to LTC Crisis

Alyssa Gerace, Septermber 18, 2013

The commission also recommended several ways to tighten Medicaid eligibility for people aged 62 and older by considering assets that are currently excluded from eligibility tests as countable, and by removing opportunities for “gaming” the program rules.

Public resources should be focused on providing care to the needy and poor, not the better-off households who are then able to leave large bequests, says the report. Limiting how much home equity is allowed for Medicaid eligibility could encourage people to turn to a reverse mortgage.

“Limit the home equity exemption to $50,000 (this would redirect many households to use reverse mortgages to fund LTSS and discourage the game of investing otherwise countable assets in exempt homes),” the commission proposed.

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The Costs of Long Term Care

A federally appointed Commission on Long-term Care recently published their recommendations to Congress about the concern of the future of the aging population of our country and how their needs will be met as they age.

Its a very serious concern and could be very costly to state and federal agencies, as most people are unprepared to meet the process of aging.   Part of their findings and recommendations, would be to use the funds from a Reverse mortgage to essentially, “self-insure” and to be able to afford the costs of aging.

Here is the second part of the article.

Committee Touts Reverse Mortgages Amoung Solutions to LTC Crisis

Alyssa Gerace September 18, 2013

“The need for LTSS and the cost to governments will grow dramatically over the next two decades with the population aging, increasing the burden on already underfunded government health care programs. Preparing to meet the LTSS needs of the population and ensuring adequate financial resources will take time,” it says. “The process should begin now.”

The use of reverse mortgages and a funding source for long-term care was named as one alternative approach to strengthening LTSS financing through private options, among other recommendations.

“Use reverse mortgages to enable seniors to use the value of their home equity to fund long-termcare services, including while remaining in their homes,” says the report. “Enable retirees to pre-qualify so funds would be available when needed.”

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Reverse Mortgages for Long-Term Care

The following article was written last September, but is certainly still relevant  now as it was then, drawing attention to the pending crisis on how to pay for long-term-care as the population ages.

10,000 Boomers are turning 62 each day and most of them won’t have enough savings to pay for any medical crisis that could occur as they age and most of them have not purchased Long Term Care insurance.

Federal and state governments are concerned about the financial impact that will effect programs, many of which have already been discontinued due to lack of funding and the families of seniors.

Here is the first part of the article and I will share the rest of it in two more posts.

Committee Touts Reverse Mortgages Among Solutions to LTC Crisis
Posted By Alyssa Gerace On September 18, 2013 @ 6:14 pm In Reverse Mortgage
“The federally-appointed Commission on Long-Term Care included reverse mortgages as a way to fund long-term services and supports among other recommendations to Congress on how to address the needs of the aging population.

On Wednesday, the committee submitted the final report to Congress following a Sept. 12 vote in favor of its recommendations, which are meant to renew national discussion regarding how to address the issues and challenges of the aging American population. The vision is to create “a more responsive, integrated, person-centered, and fiscally sustainable LTSS delivery system that ensures people can access quality services in settings they choose.”

Currently, the federal and state governments pay for 62% of paid LTSS, amounting to more than $130 billion a year, the Commission’s report says.”

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