financial advisors

Misinformation About Reverse Mortgages

The word “misinformation” is used regularly by the news media, political figures, various social groups, and everyone claims they are sharing the truth about what is happening in our communities and countries.

Citizens are questioning the traditional sources of news and harbor doubts about what is accurate, true, a distortion, or a myth.   It is confusing and creates anxiety and a sense of helplessness.

Misinformation has distorted the truth about reverse mortgage for many years.  So much so, the distortions continue to circulate with older adults and their children and because of their unfounded beliefs, would never consider using one to have funds for care giving, or to eliminate and ongoing mortgage payment.

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Unfortunately, many Financial Advisors remain uninformed and embrace many of the same beliefs and would never consider their use for a client.   But what if their client is withdrawing funds from their investments to pay for a mortgage, medical costs, home repair, care giving fees?

And they liquidate their investments?  “poof”.   And their Advisor just lost a client due to poor financial advice.

Before anyone “writes off” considering using a reverse loan, Do the HUD Counseling and don’t ask for advice from your friends, neighbors, hairdresser, or doctor.   They are not qualified to answer your q uestions.

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Avoiding Liquidating Your Investments

Preserving Investment Portfolios

Retirees often have investment portfolios that they rely on to generate income during their retirement. However, market volatility and economic uncertainties can pose risks to these portfolios. A reverse mortgage can help mitigate these risks by providing an additional source of income, allowing retirees to preserve their investment portfolios.

By leveraging the equity in their home, retirees can use the funds from a reverse mortgage to cover their expenses, reducing the reliance on their investment portfolios. This allows them to ride out market downturns without being forced to sell investments at inopportune times. By preserving their investment portfolios, retirees can increase their chances of long-term financial success and maintain their desired lifestyle.

The #1 worry of older Americans is not their health, but outliving their money.   Drawing down on investments and savings can be costly due to possible tax complications and possibly running out of funds to meet monthly expenses.

Funds from a reverse loan can possibly eliminate risking losing investments by leaving them in place regardless of market conditions.

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Conclusion

A reverse mortgage offers a range of benefits that can empower retirees to maximize their assets and live a comfortable and worry-free life during retirement. From providing financial flexibility and security to helping cover medical expenses and caregiving costs, a reverse mortgage can be a valuable tool in enhancing your financial well-being.

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Are Reverse Loans Safe?

Reverse loans are highly regulated and the senior consumer is well protected from any type of financial abuse and over the last decade many regulations have been put into place which makes a reverse loan a very safe option for seniors to use.

Before anyone can start the loan process, they must complete HUD Counseling with an approved Counseling agency and they can ask questions and discuss their concerns with the counselor.

A list is provided to the potential borrower with a proposal provided by the Loan Officer that offer many counseling agencies for them to chose from.

All fees are disclosed in the proposal, and can be discussed with the Loan Officer.  Along with federal regulations and disclosures, each state has their own set as well.

Spouses who are under the minimum age 62 will be able to remain in their home if the older borrowing spouse predeceases them, and no longer have to worry about selling and moving out of their home.

See what my clients are saying about me.

Seniors are worried about out-living their money, and with medical expenses, care giving costs, utilities, food and other monthly expenses, funds from a reverse loan can make life easier and certainly remove the stress and worry about running out of money.

They are a very safe and sensible option on how to use the equity in your home, for funding and preserving your retirement and could be an important part of a financial strategy to make your savings last longer.

 

 

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Reverse Loan; Fixed or Adjustable?

Reverse loans offer many choices to senior borrowers, but it can be confusing to decide which one to use because they are different from traditional mortgages, no mortgage payments are required and they are easier to qualify for on a fixed income.

And they also do not have a loan term.  Reverse loans are still a mortgage, but unlike what we are all accustomed to.   They are different, but similar in that both are liens against the subject property.

In the past when applying for a mortgage to buy a home or refinance, the most popular one was the Fixed rate, because you always knew what your mortgage payment would be, unlike an Adjustable Rate Loan where it can change and possibly increase over time.

And everyone always shops for the lowest interest rate, but that meant you had to pay more Points to get a low interest rate, but if you chose a higher rate the Points would decrease, or possibly be a “Zero” Point loan.

However, with a reverse loan, it is entirely different.   There are no Points, but an Origination fee and sometimes, there isn’t any fee at all.

The other difference is how the selected interest rate determines how much money you will receive from a reverse loan.  Sometimes the lower interest rates provide less money, and cost more, but if the loan is being used to pay off an existing mortgage and freeing up more cash flow, then that would be a consideration.

And then there is the question whether or not to chose a Fixed interest rate or the HECM Line-of-Credit.  is the borrower paying off a large mortgage?   Then the Fixed rate might be the best choice.

But if there is a small mortgage or none at all, then the HECM Line-of-Credit would be the preferable choice, as it will give the borrower more flexibility with their funds, plus it has a “growth” feature that will provide additional funds in the future.

Anyone reading this is most likely thinking, it’s confusing.   And it is.   And that is exactly why it is important to meet with a Reverse Loan Consultant who can provide you with a personalized proposal and eliminate some of the confusion.

In the midst of Covid-19 and the uncertainty of the future, more seniors are now actively investigating the benefits of a reverse mortgage and many have applied for their own loan to preserve their savings and have a financial “safety net”.

And maybe you should, too.

 

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Covid-19 and Seniors at Risk

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.

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