September 2014
Financial Planners and Reverse Mortgages
Reverse loans have not been considered by Financial Advisers to be a viable option when it comes to retirement planning and if anything they have been very, very negative about them.
The main reason I think that this has been their prevailing attitude, is because they have never fully understood them and how they can actually benefit retirement planning if used as part of one of the options for a plan.
Gradually, their attitude has begun to turn around, albeit very slowly but many of them are now seeing how the use of a Stand Alone Reverse loan can extend retirement funds for their clients.
Plus, the majority of the Boomers are still carrying a mortgage on their homes and will be burdened with payments and may not be able to retire. Rather than drawing down on a portfolio of investments, funds from a Reverse loan can pay off any existing mortgages and offset any income shortages and cover any other unforeseen costs that may occur in the future.
The trade journal to Financial Planners recently ran an article talking about the benefits of the FHA HECM program and why they should seriously being to consider this to be another avenue to solidifying a retirement fund.
Here is a copy of the article with the remaining portions to follow in the next couple of posts.
Financial Planners: New Rules Make Reverse Mortgages Attractive
Posted By Cassandra Dowell On August 28, 2014 @ 6:50 pm In Reverse Mortgage | No Comments
“Financial Planners should consider recommending reverse mortgages for elderly clients and for the parents of middle-aged clients, writes Financial Planning in a recent article [1], noting that new rule changes [2] position the product to better protect borrowers.
“[Reverse mortgages] can be a very useful tool for seniors who plan to stay in the home for a long time,” Jim Kinney, who heads Financial Pathway Advisors in Bridgewater, N.J., tells Financial Planning.
However, Kinney cautions, reverse mortgages are not a good fit for those who do not have the resources to maintain their home.
As a consequence, applicants now must undergo a financial assessment in order to qualify for a loan; lenders are required to make sure a borrower can pay for insurance, taxes, and home maintenance, based on the applicant’s assets and cash flow.”
The last paragraph is not entirely correct. As of this time, the financial assessment is not being done but we anticipate it to be in place before the end of the year. There will be no “pass” or “fail”, but rather if it’s determined that the borrower might have some difficulties paying their property taxes and homeowners insurance, the lender will create an Escrow account to cover these expenses.
New Jumbo Reverse Mortgage Option
Here is the remainder of the article that discusses the new Jumbo Reverse loan option, with some suggestions on how it could be used.
Other Lenders are also coming out with their own proprietary products and it will be interesting to see how much they might differ from one another in pricing and in the interest rate. I’m sure that they will all be competitive to one another, which could be a benefit to the individual that is interested in this new reverse loan option.
‘HomeSafe does not carry a required mortgage insurance premium and is more flexible than a HECM, UFA notes, in that it offers seller concessions and lender credits in purchase transactions, and opens the option of a reverse mortgage to condo owners. Additionally, all of the loan proceeds are available upfront at closing.
“UFA has been a trusted resource for traditional HECM reverse mortgages for more than a decade,” McClellan said. “With HomeSafe, now we can meet the needs of even more consumers through a compelling and competitive proprietary reverse mortgage product.”
As of this week, the HomeSafe is available to qualifying borrowers in California, Florida, Hawaii and New Jersey; UFA plans to expand the product reach into additional states.
Urban is the first company to offer a new jumbo reverse mortgage in more than four years; the most recent jumbo introduction previously being the Generation Plus from Generation Mortgage. American Advisors Group has also stated publicly [2] it is working on development of a jumbo product, and Generation says it may update its product in the changing marketplace.
Written by Elizabeth Ecker September 2, 2014
A Jumbo Reverse Mortgage
I shared in my previous post, that a new Reverse loan would be coming out as of today for those situations where the traditional FHA HECM program won’t work for a property that has a large existing loan balance but a great deal of equity.
If a homeowner has a property valued well above the HUD lending limit of $625,250 but are paying on a large mortgage, most of the time the HECM will not work for their situation and they don’t qualify for the FHA loan program.
Now with the advent of these new Jumbo products, they will not have another option other than the FHA program.
Here is the second part of the article discussing the new mortgage.
Urban Releases More Detail on HomeSafe Jumbo Reverse Mortgage
Posted by Elizabeth Ecker 9/2/2014
“Now homeowners with significant value in their homes have a reverse mortgage option that may afford them more loan proceeds, and potentially a greater amount of cash up front, than a HECM product,” said UFA President Steve McClellan in a press release. “Ultimately, HomeSafe can give borrowers an opportunity to tap into more of that property value when they need it.”
Urban shared initial information regarding the launch last month, and is this week releasing additional loan information. The minimum age for a HomeSafe loan is 62, and while borrowers can use the proceeds however they so choose, UFA notes the loan may be well suited to extinguish existing mortgage debt, making home improvements,supplementing medical and home care coverage, or purchasing a new residence.”
I will share the remainder of the article in my next post, because it is quite long and too much to post here.
Need More Money from a Reverse Mortgage?
Since my previous posts, additional Reverse loan lenders are planning on releasing their own proprietary reverse loans and although I don’t have much in the way of details as of yet, I will know more tomorrow after attending a webinar on it via UFA.
I am not exactly excited about the Jumbo loan as of yet, until I see the details and how much they may allow a homeowner to receive. Previous Jumbo reverse loans were very conservative on the LTV ratio and I’m wondering if the newer ones will be any different.
Here is part of an article that discusses a few of the details on the Jumbo program from Urban Financial America, but at this time, I’m not hearing anything new in the description. Just the standard qualifications as far as the age of the borrower and the various ways one can use the funds.
Urban Releases More Detail on HomeSafe Jumbo Reverse Mortgage
Posted By Elizabeth Ecker On September 2, 2014 @ 5:11 pm In American Advisors Group,Generation Mortgage,Jumbo Products,News,Reverse Mortgage,Urban Financial of America | No Comments
After announcing [1] in August it would enter the proprietary reverse mortgage market, Urban Financial of America this week released additional detail around its HomeSafe jumbo reverse mortgage, now available in four states.
The HomeSafe, which UFA is rolling out this week, offers borrowers with high valued homes the opportunity to borrow up to $2.25 million in loan proceeds—compared to the maximum lump sum option under the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) program of just shy of $470,000.
I will share the rest of this article in the next couple of days, as it’s too long for one post.