January, 2016 | Reverse Loan Consultant

January 2016

January 18, 2016 Reverse Mortgages No Comments

Senior Home Equity

In the last several years, the amount of equity that American seniors retain in their homes has grown to be huge.

The figure is quite stunning at $5.76 Trillion dollars!

Yes, you read that correctly.

And I suspect that it will continue to increase as more people turn age 62 and still own a home.

This amount of equity will certainly be a very important component for this age group to retire and pay for any services they may need as they age.

Far too many people are unprepared to retire and most of them are drastically underfunded to even consider it.

Obviously using a Reverse loan to access one’s equity will increase in the coming years.

Here is an article that discusses this news.

U.S. Seniors’ Home Equity Rockets to $5.76 Trillion
Posted By Jason Oliva On December 27, 2015

“Seniors’ home equity hit a $147 billion growth spurt in the third quarter of 2015, continuing its steady climb for the eighteenth consecutive quarter, according to recent readings from the National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index (RMMI).

In total, the $147 billion increase in the aggregate value of homes owned by seniors rocketed their share of home equity to $5.76 trillion, propelling the RMMI to a new all-time high in the third quarter of 2015 at 200.19.

The multi-billion growth in senior home equity builds on its momentum from the previous quarter, where a $122.8 billion increase contributed to $4.08 trillion of home equity held by seniors, in turn powering the RMMI to a then-record-high of 195.29.

Meanwhile, mortgage debt held by seniors rose slightly from $1.45 trillion to $1.46 trillion, though the gain barely made a dent in home equity levels, according to NRMLA/RiskSpan.

To estimate the value of aggregate senior home equity, the RMMI numbers for the third quarter are based on a revised methodology that includes data from the 2013 American Community Survey and the Federal Reserve’s Z.1 release.

The recalibrated index uncovered something NRMLA/RiskSpan did not expect to see, which was that senior housing values outperformed the general population, said NRMLA President and CEO Peter Bell.

“In metro areas hard hit by the Great Recession, for example, senior home values were more resilient to declines,” Bell said in a written statement. “It’s great news for seniors who are considering tapping their housing wealth to support their retirement planning.”

The methodology changes and data source updates resulted in a 37% increase in the aggregate value of senior home equity.

January 5, 2016 Financial Planning and Retirement No Comments

Protect Your Investments Using a Reverse Loan

I started my career as a Reverse loan consultant almost 14 years ago and at that time, there was only one option for seniors and not the choices that we have today. In particular, the last two years have seen many changes to the loan program, far too many to mention here. But they have become safer with new regulations in place to protect the borrower and are better than any time in the past.

The original loan wasn’t that attractive because it adjusted monthly and had a 10% Life time Cap on it, but in the following years there have been numerous changes to the FHA HECM program. Fixed rates are one choice, but now the Line-of-Credit ( HECM ) adjusts annually instead of monthly, with a low 5% Life Time Cap and has turned out to be a very valuable tool in retirement planning.

Reverse loans are now being readily embraced by Financial advisers and CPA’s as a viable alternative to eliminating the need to draw down on retirement savings and as we move into a new year, the acceptance of this important option for retirement longevity has become not only more important but more accepted.

USA Today published an article discussing this very topic and here is a summary of it and why using a Reverse mortgage is a smart plan.

USA Today: Using a Reverse Mortgage to Protect Other Investments.

Posted By Jason Oliva On December 29, 2015 in Reverse Mortgage Daily

“The reverse mortgage line of credit continues to gain acknowledgment from the mainstream press for its ability to help retirees protect their other investments such as IRAs.

In a recent column, USA Today personal finance and retirement contributor Robert Powell fielded a question from one reader who said she and her husband are considering converting their traditional IRA to a Roth IRA. The reader, Brigitte Kelley, 67, of Milledgeville, Ga., also expressed her husband’s willingness to do a reverse mortgage.

After addressing the IRA conversion inquiry, advising Mrs. Kelley to consider her future tax rate, among other important considerations, Powell then tackles the reverse mortgage question.

“As for the reverse mortgage, some experts suggest applying for a reverse mortgage with a line of credit as soon as possible,” Powell writes. “Why might you do this? Having a reverse mortgage with line of credit in place gives you the option of taking money out of your house instead of your IRAs when markets are down.”

Powell then cites a study published this year from Wade Pfau of The American College of Financial Services, which describes in detail six strategies for incorporating home equity into a retirement income plan through the use of a reverse mortgage.

While retirees should consult with a financial adviser to determine which strategy might work best for their retirement plan, it may be worth considering getting a reverse mortgage earlier in retirement as opposed to later.

“But what Pfau’s study did conclude without equivocation was this: ‘A key theme is that there is great value for (people) to open a reverse mortgage line of credit at the earliest possible age,’” Powell writes.”

Read the entire article here:

Written by Jason Oliva