Category Archives: Reverse Mortgages

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/

 

 

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

 

 

 

 

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.

 

 

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.

 

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