Tag Archives: Hecm

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.

 

%d bloggers like this: