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Tom Selleck is promoting Reverse Mortgages now….

If Magnum PI is on board, why wouldn’t you get a Reverse Mortgage?

Just kidding, its a really great commercial from one of our investors. We write Reverse Mortgages and sometimes transfer them to AAG.

I think it was a wise choice to bring Tom Selleck on as the new spokesperson, replacing Senator Fred Thompson who recently passed away.  Like Thompson, Selleck is a trusted TV figure whom many seniors have watched and listened to for decades.

The “it sounds too good to be true” line is something I hear all the time.  It does seem too good to be true that you could:

          Get money or eliminate a monthly mortgage payment

          Its Tax Free

          You never have to make a monthly mortgage payment

          Your heirs will never be liable for its repayment

Its a simple math equation, and I run the numbers every day for people who don’t understand how it can do this.  Rest assured, it does.

For the official word from HUD/FHA, click here.

If you still don’t understand, that is normal.  The FHA HECM loan is the most complex residential mortgage I have ever written in my 15+ years of originating residential home loans.  Because of that, Fairway Independent Mortgage requires that any Mortgage Banker take additional training over 3 days to fully understand how to originate this loan to the best possible benefit of the client. Furthermore, Fairway Independent Mortgage puts a dedicated Reverse Mortgage Planner in each branch so the client has a local Mortgage Banker to help them.  Its way to important and complex to trust to a phone room operation.

Still have questions?  No worries, I am available to Idaho residents to answer any questions or run Reverse Mortgage calculations or scenarios for them.  Contact me here.  http://www.loansbyrogerhowell.com/

 

 

WSJ article, “The new math on reverse mortgages”

A really good, short read on Reverse Mortgages here:

http://www.wsj.com/articles/new-math-on-reverse-mortgages-1458525888

Quote: Prof. Moulton cites a recent report by Harvard University’s Joint Center for Housing Studies that found that nearly 40% of seniors age 65 and older carry a mortgage today, a rate that has more than doubled since 1992. “Using a reverse mortgage to pay off a forward mortgage frees up monthly cash flow to a household,” she says. “Essentially it has the same effect on a household budget as receiving a monthly annuity payment.”

This is why more and more people are looking at a Home Equity Conversion Mortgage, aka Reverse Mortgage when they are considering retirement or early in their retirement years rather than waiting until it becomes a last resort.

Just recently I helped a client who was in the pre retirement phase and planning for the day they can quit their job.  Eliminating their mortgage was the same as putting $800 a month back into the budget.

Sometimes, its worth bringing cash to closing is your initial HECM benefit is not enough to payoff your existing forward mortgage.  If you brought a years worth of payments into close, assuming you had it in an account like IRA, 401k, or any other account, wouldn’t it be worth it to have the option to retire when you want to?

Other times a client might have a home paid off or mostly paid off but now we are establishing a HECM standby line of credit.   The HECM standby line of credit cannot be cancelled nor do you never make a monthly payment.  It can be a valuable retirement planning tool.  You might not need the line of credit in your 60’s or 70’s but by the time most of us are in our 80’s, we probably will have some health care needs or necessary home modifications and the HECM standby line of credit can be used to address those needs.

Establishing the HECM standby line of credit early on, you will benefit from the growth of available funds, currently in the 5% range per year.  Your available funds could more than double in a decade or two if you don’t draw out the funds until you have a real need.

By waiting to do so, you miss out on this growth and you might find you can’t qualify for a forward mortgage like a traditional bank HELOC.

Anyway, more and more financial advisors and sources like the Wall Street Journal are learning more about Reverse Mortgages, aka HECMs and more and more are coming out in favor of them as a valuable retirement planning asset.

To learn more, you can go to my HECM website  or simply call me at 208-955-9080 and I will be happy to discuss your individual situation.

 

 

How to use a Reverse Mortgage to cover future healthcare expenses

I recently attended a workshop on healthcare cost and was astonished by the impact of healthcare costs on the net worth of senior home owners.  The average cost of a nursing home averages $91,000 per year, in home care about one third of that.  At that rate, someone who has been able to accumulate wealth, pay off their home, and enjoy retirement in that home are all at risk by a healthcare event.

If you have to go into a Medicaid facility, any home equity will be liened by the facility and will be not be available for the senior homeowner to use.  Furthermore, in order to get into a Medicaid facility, you cannot have more than $2000 in assets.  Many times, people end up spending assets in advance to qualify.  In effect, they are “spending themselves poor” as I heard it called.  Medicare also requires that any transfers of assets for a certain time are examined and could be taken back from family members if it was determined that it should have been used for healthcare expenses.  This can be a very stressful and exhausting process for all at a time when the health of a loved one should be at the top of everyones’ concerns.

The Home Equity Conversion Loan, also called a Reverse Mortgage, can provide access to the homes equity to pay for: home modifications, medical expenses, and ideally, long term care insurance policies that take the burden off the individual and create a pool of money that can be drawn upon to pay for care, either at home or in a facility.   The Home Equity Conversion Loan puts a “protective umbrella” over the home’s equity and make the filing of future liens untenable.

Long term care policies come in several forms from stand alone policies with monthly or single lump sum premiums and other hybrid type policies that combine long term care money and life insurance into one policy.  By taking the procedes from a HECM and buying LTC insurance you can guard against a healthcare event that destroys net worth that might have taken decades to aquire.

One of the more interesting uses of a HECM is to have the home remodeled and adaptaed to current needs.  Doorways can be widened for wheel chairs, showers and bathrooms made more accessable, and any other adaptations needed to age in place.  At the end of our lives, I think we would all prefer to stay in our home.

Here is a useful booklet from the Council on Aging.

If in home care is an option, it will cost much less than a facility and can extend the time that insurance funds can cover care.

A Reverse Mortgage can be used to pay premiums on long term care policies.  If a Reverse Mortgage is obtained early enough, the growth of the line of credit can offset the annual premium costs.

As our citizens grow older and our life spans increase, the problem of outliving our assets is very real. A lifespan of 100 years or more is becoming more common.

Personally, I will be obtaining my own reverse mortgage in a few years as soon as I can.  I might not need the funds now, but who knows what my health care needs will be at age 90,100 or even 120.  I might be a bit optimistic, but who knows?

Anyway, if you would like to see how the program can help you protect your assets and provide for the long term healthcare needs, just contact me and I would happy to help.

 

 

 

What are the new rules for Reverse Mortgages on April 27th 2015?

The Home Equity Conversion Mortgage, aka Reverse Mortgage will have new requirements after the 27th of April, 2015.

The borrower seeking a HECM will have to undergo a financial assessment done as a part of the process.  If the borrower is deemed to be incapable of handling the ongoing responsibilities of the loan, ie property taxes and insurance, a portion of the loan will be set aside to cover property taxes and insurance.

The most common way Reverse Mortgage borrowers get in trouble late is being unable to pay their insurance and taxes.  Defaulting on those items can put them into default and eventually foreclosure.

If a borrower has a good credit payment history and sufficient income, they can probably handle the property taxes and insurance.  If they are lacking income or have a history of delinquent payments, then it’s probably a good idea to set aside some of the funds to cover these future expenses.

Now, if you are currently in process of getting a reverse mortgage, this will not apply to you.  Anyone who starts an application after the 26th, the new rules will apply.

 

New Changes to the FHA Home Equity Conversion Mortgage, aka Reverse Mortgage. Great News for non borrowing spouses!

New rules go into effect on new Reverse Mortgages originated after August 4th that protect a non-borrowing spouse from foreclosure.

One of the criticisms of the Home Equity Conversion Mortgage is when a younger spouse, who cannot be on the loan if they are less than 62 years of age, looses their older spouse, the loan becomes due and payable.  Many times they are not able to qualify for a new refinance loan, and the home eventually gets foreclosed upon.

Recent case-law has established that the non borrowing spouses cannot be foreclosed upon, so HUD has written new guidelines that prevent the non borrowing spouse from facing foreclosure.

As a result, HUD has published new principal limit factor tables that run from ages 18-90 that give an approximate percentage that a married couple could borrow using a Reverse Mortgage.

The new principal limits are based on the age of the youngest spouse, generally.  This has the effect of lowering the amount that a Reverse Mortgage can provide but protects the younger, non borrowing spouse.

I think it’s a pretty good and fair tradeoff.  The Home Equity Conversion Mortgage is a life changing program for those who choose it but was a potential housing nightmare for non borrowing spouses prior to August 4th.

There are requirements on the non borrowing spouse, too many for a single post, but generally if they continue to live in the home as their primary residence, pay the taxes and insurance and maintain the property, they can stay in the home.

If you have questions about the Home Equity Conversion Mortgage, aka Reverse Mortgage, feel free to contact me and I can answer any questions for you as well as run custom quotes for your individual situation.

 

Mortgage improvements and updates in 2017, My predictions…

 

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2017 will bring many new and exciting changes to the mortgage industry and those seeking a home loan.  Some are new programs and new sources for those programs, others are updates and changes to existing residential home loan programs.

These include:

FHA lower Mortgage Insurance premiums                                                              

Increased loan limits on Fannie Mae and Freddie Mac loans

New, affordable home buying programs for first time home buyers

Higher, maximum loan limits on Home Equity Conversion Loans (Reverse Mortgages)

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Some, others are more predictions, like:

Higher interest rates

An improving economy, or even the expectation of a better economy and consumer confidence will cause higher interest rates as investors demand a higher return for their money.  The rates we have seen the last few years were below market in an attempt to keep the economy from slipping back into a recession.

Continued home sellers market

This contributes to higher prices, although higher rates will eventually slow this down.

Housing shortages in some markets

Home buyers continue to move out of state for work or other reasons.  Our market in Boise, Idaho continues to benefit from the influx of out of state buyers moving here.

Tightening of the zero down payment options.

last year, Idaho Housing and Finance Association made several changes to their down payment assistance programs.  Still there are several zero down payment options available and ways to make it very little out of pocket.

With all the changes that happen in the market, it’s really important to get a local expert team working on your behalf.  That being said, I feel optimistic for home buyers and home owners seeking a home loan in 2017.

For more information or answers, contact me here at www.loansbyrogerhowell.com and I will be delighted to help you.

 

 

How can older Americans dig themselves out of debt?

“Don’t be paying a mortgage with social security” is a quote from my father years ago.

After reading this, I have a few thoughts:

http://reversemortgagedaily.com/2015/08/20/few-older-americans-relying-on-home-equity-for-retirement/

 

Going into retirement with debt and mortgage payments is a really bad idea.  Its unfortunate that  too many Americans find themselves in this position.

Sometimes it due to a job loss, divorce, or healthcare event that causes this.  Other times its simply not saving enough or making an effort to pay down debt and save more.  Fortunately, this can be fixed, even if you are in your 40s, 50s or even early 60’s.

Recently, I was with a refinance client  in their 40’s/early 50’s and after the closing and they were lamenting they would never be able to retire and stop working as they had just taken out a new 30 year mortgage. They were just looking at the date on the note.

The next morning  I ran their numbers and projected the amortization schedule with a small yearly home appreciation (3%) to see how much their projected equity would be.  At age 62, they would have paid down their mortgage enough to get a Reverse Mortgage and eliminate a mortgage payment out of their retirement budget.  I immediately communicated the good news to them. The conversation went a little like this:

“If you stay on the regular payment plan of your new mortgage, you should have enough home equity to put a reverse mortgage in place when you both reach age 62.”

Delivering great news to clients is just one of the many satisfying aspects of my profession.

Lesson is: No matter how late you are to the retirement planning, you should start.  Even 10 or 15 years of planning will drastically improve your retirement.

For more information on how a reverse mortgage works, go to: My Reverse Mortgage information website

or you can contact me at 208-955-9080

 

 

 

 

Summer home sales in Boise, Idaho are smoking hot!

the Independence day weekend marks the mid point for summer sales for most of us. Boise’s 2015 sales season has been very hot from the early spring.  Unlike 2014, when we had a prolonged, colder winter, people seemed to be ready to start shopping in February.

Earlier on, in the start of the season, we say several homes sold at or above asking price.  Many others, have come back over the appraised value and some people still bought.  In most cases, a cancellation or re-negotiating  of the sales price happened.

Other interesting fact, the local real estate appraisers are factoring the “Production Builder penalty” into their valuations.  Without naming any specific names, we have several builders in the Treasure Valley who build hundreds of homes a year, typically in their own subdivisions.  If they build for less than “Custom Home Builders”, the value a home owner is going to be compared to other homes built by that builder.  They could be as much as $20/foot or more less than a custom home of the same size and finishes.  This has led to some upset realtors and home owner’s but its something to consider when buying or building a new home.

Realtors I work with are reporting multiple offers on newly listed homes in a matter of days if not the first day a home is listed on the local MLS.

As a result of our hot market, I am seeing longer times to appraise a home.  Loan underwriting times are getting longer as well as more home purchase loans are submitted.  FYI, Fairway Independent Mortgage Corporation underwriting times are about 5 business days right now.  Most loans are getting finished within 30 days of application.

Another trend I am seeing is people relocating from California, Nevada, and other states to the Boise area.  Many times they are retirees with pensions and cash from the sale of their previous home.  They can pay cash and close in a couple of days if they wish.  This may not be the best use of that lump sum, the HECM for Purchase Loan enables borrowers 62 or up to put up a fraction of the price of the new home and a reverse mortgage, or HECM, will cover the rest.  Expect to put down half and the Reverse Mortgage covers the rest.  Save the rest of your cash for getting outdoor and enjoying what Idaho has to offer.

Mortgage interest rates are still low.  They have moved up about .5% on a 30 year fixed rate loan from the low 3’s to the upper 3’s and low 4 percent rates as of today.  The “experts” keep saying rates are going to go up in the future, but so far they are holding at historically low rates.  You could be regretting not getting a home if you had the chance in summer of 2015 and didn’t.

 

About Me

I’ve been helping people in Idaho  for over 12 years with their single most important financial  comittment, their home finanacing!

I became fascinated with home financing over 13 years ago when I was buying and fixing up homes.  My mortgage broker made it look easy and fun.  Soon I was leaving my old career in restaurants behind and started as a new loan officer in Pocatello, Idaho.  This was during the subprime boom, and there were pleanty of subprime borrowers in Pocatello that needed my help.  Soon I was asked to open an office in Boise, and I jumped on the opportunity.

The new construction market was taking off at this time, so I became an expert in construction loans and rehab loans.  During this time I also built and sold several  homes in Canyon County.

The market meltdown of 2008 left many of us without the programs we were used to providing and many of my colleagues left the business when the easy times were finished.  I knew that there will always be people who need my help, and that the big, dinosaur banks were not equipped to serve them.  For this reason, I have stayed in the industry when others fled for easier work.

The market has changed so much in the last 4 years.  I’ve become an expert in FHA, RD, VA and Idaho Housing loans.  They have become the primary mortgages for people in Idaho.  Almost all those specialty loans of yesterday have gone away.  It is a lot harder to qualify and close a loan today.  For that reason, you need an expert.

Today, the name of the game is to quickly qualify people for the loans that are available and close them quickly and with the least amount of stress possible.

My company, Fairway Independent Mortgage Corporation, is a mortgage bank.  By becoming a mortgage bank, we gained the ability to underwrite and fund our loans in house.  This give us much more control of the process and as a result, we can do this faster and at a lower cost than the dinosaur banks.

In 2015, I received the Certified Reverse Mortgage Planner training to better serve my clients.  I am very optimistic about the ability for the Idaho home buyer and Idaho home owner to get great financing to help them meet their financial goals.

I’m always available to discuss your mortgage needs, I can be reached at 208-861-7579 or to get started right now, go to my secure online website at https://www.rogerhowell.com

Roger Howell

Senior Loan Officer

NMLS #74935

Fairway Independent Mortgage Corp. NMLS #2289

Its spring time, how is your credit?

With the spring finally coming to the Treasure Valley, many will be going out to look for a home this year.  The first nice weekend of February is what I typically see as the start of the main sales season for real estate in the Treasure Valley.

Like those preparing for a marathon, preparing to buy a home will pay massive benefits when you get out and start making offers on houses.  The single most important aspect of that preparation, is to check your credit report.

Checking ahead of time will allow you to correct any errors on the report before you apply for a mortgage pre-approval.  This could qualify you for better loan programs or options not available for those with lower scores caused by erroneous credit reporting.

Here is an article from my other site that discuses the habits of those with great credit scores.

Weather you are in the market for your first home, or are buying that retirement home, it pays to stay abreast of your credit report.

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