The increase in Social Security benefits for seniors is the largest in four decades and on the average will increase monthly checks by about 5.9%
However, it won’t offset inflation or the cost of living, plus it will be taxed as income.
Initially some seniors might be excited to see their checks increase, but all in all, it will be “zeroed” out as the costs of goods, food, utilities, and medical care continue to increase.
It is a bit depressing, but there are many seniors who own and live in their homes, and they are now more than any other time in the past, using funds from a reverse loan to pay their ongoing expenses, and eliminate making a mortgage payment.
Eliminating a mortgage payment, increases their cash flow each month, and may slow down withdrawing funds from savings and investments and leverage the longevity of their cash reserves, plus possibly avoid paying tax penalties for the withdrawal of funds from their accounts.
Reverse loans are highly regulated, safe, and a sensible way for seniors to age in their homes and have some peace of mind. They can afford to continue to do so without possibly running out of their investments or savings, and they can refinance them in the future for additional funds without any prepayment penalties.
Considering a reverse loan for financial stability should always be considered and part of a retirement plan, and it is a wonderful option to have for older Americans who wish to remain in their homes.
What are the steps to apply for a reverse loan? Is it the same as applying for a traditional mortgage or is it different?
It is just like applying for a regular loan, except the borrower won’t have to make any mortgage payments but they will still be responsible for maintaining their home, paying the property taxes, and Homeowners insurance.
The loan application is standard, but there are many lender, state, and federal disclosures to sign in the application package. It does require quite a few signatures and a complete copy of it is left with the applicants to save and review.
Along with the signed application, copies of bank statements, Social Security card, Drivers License, Declaration page for Homeowners insurance, Trust ( if there is one), and any mortgage statements for the property, plus a signed HUD Counseling Certificate.
The file and documents are sent to a loan processor, Escrow is opened and a Title Policy is ordered, along with an order for an appraisal to be scheduled.
When the loan processor has all the necessary items to make the file complete, it is sent to a Lender for Underwriting.
They review it and make sure it is complete prior to giving it an approval. Sometimes they may request a few additional items, but nothing that is unusual.
The next step is to order the loan documents and coordinate with Escrow, assign a Notary to meet with the clients and have them sign the documents.
The documents are returned to the Closing Department of the Lender, they review them for all signatures, communicate with Escrow to finalize closing figures and after the 3-day Right of Recession, the loan funds and closes.
The entire process takes approximately 45 days as long as the borrower has provided all of the necessary documents that are needed for the file.
Appraisals can cause a delay, or issues with the Title of the property, and sometimes the lack of cooperation from the borrower will cause the loan to take longer to complete.
Applying for a reverse loan is generally not difficult and can be completed in a reasonable amount of time.
We can never know what might or could happen in our lives from day to day. Recently it has been the pandemic of Covid-19 that has killed almost 200,000 Americans as I am writing this and the extreme fall-out from it which has created a massive amount of people who have lost their jobs and businesses.
Then there are the weather events. Massive killer fires in the western half of our country and the East and the South have to face more hurricanes and flooding. No one feels safe anymore and if you are a senior, even less so.
And that is why more seniors are seriously considering using a reverse loan so that they have money that is “banked” and available to them no matter what happens.
One example would be they have an insurance claim for damage to their home and the insurance company is fighting with them over it, at least they have money in the meanwhile to take care of their personal needs until they reach a settlement.
Add in isolation for seniors due to Covid-19, and anxiety about money is not a positive situation, but at the least having enough money reduces some of it, and about how to pay for food, care giving and other monthly expenses.
If a senior has been relying on income from being employed to pay their mortgage payment, but now they are unemployed, they could refinance into a reverse loan that doesn’t have a monthly payment.
But reverse loans have a reputation for being expensive, but are they? They have the same costs as a traditional loan, but many people have heard they are expensive, but in truth, they are not.
Now more than any time in the past, is the time to learn about reverse loans, how much money you could receive, and if doing one is your best option to eliminate your worries and fears about the future.
Contact me for a chat about your situation and find out if a reverse loan be of value to you.
It has been a while since I have written anything in my blog, because like everyone else, my life was turned upside down with the pandemic and it’s destructive swath across the world, taking lives, ruining economies, creating fear, anxiety, and uncertainty.
Anyone who had a 401-K, some sort of a retirement plan or at the least, a savings account have seen them dashed, drained away and depleted within days and the Stock Market will continue to reel in uncertainty for most likely, a very long time.
Eventually, we will get through this terrible time, but if you are a senior, you may not have the ability to wait it out until the markets recover and are very worried about running out of money. I am here to say, that this is the one time a senior has an advantage over younger people because they have an option that younger people don’t have.
If a senior age 62 or older, lives in their home (even if they have a mortgage on it), they could apply for a reverse loan. However, too many are afraid of them because they think the Lender will end up owning their home (false), they have to still make payments (false), there is “fine print” to trick them (false) and they are “too good to be true”. (False again.)
- The FHA HECM is the most regulated mortgage in the lending industry, to protect seniors from financial abuse.
- Anyone who wants to apply for a reverse loan must complete telephone counseling with a HUD-approved Counseling Agency.
- There are no mortgage payments, however, the borrower must continue to pay property taxes, Homeowner insurance and keep their home in good repair.
- There are no restrictions on how the borrower uses their funds, except they are discouraged from buying annuities or other investment products.
- They can remain in their home for their entire lives and leave it to their estate.
The reverse loan industry is seeing an increase in loan applications at this time because obviously money from a reverse loan will give them the safety and security they need and take away the fear and anxiety about running out of money.
The loan is safe, well-regulated and an ideal solution for all senior home-owners to consider right now. From the time the HUD Counseling is completed, the loan processing time takes about 45 days, however, it might begin to take longer with the increase in applications.
Although I am located in California, anyone who reads this may contact me if you have questions. I can point you in the right direction for a reverse loan consultant in your state.
Don’t hesitate. If you have a home or Condo and you are old enough, you have this opportunity for financial security. Look into a reverse mortgage. Now.