Archive for the 'Mortgages' Category

Unique Ways To Utilize a Reverse Mortgage

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The government-insured reverse mortgage product can be used in a variety of ways to help seniors age in place during retirement.

Here are three little-known ways that seniors can use reverse mortgages:

  1. Purchase a New Primary Residence (HECM For Purchase) - One of the best features of the HECM program is the ability to purchase a home and take out a reverse mortgage in one transaction. By doing this, borrowers can purchase their dream home during retirement and not be required to make a mortgage payment while they remain in the home.
  2. Purchase a Second Home - By utilizing a reverse mortgage on a primary residence, many borrowers decide to purchase a smaller, second home in a different part of the country. By using the equity in your primary residence, you may add a second home in a warmer climate, or that is closer to family and friends.  You must live in your primary residence at least 6 months out of the year for this to work.
  3. Fund In-Home Care - The use of a reverse mortgage to fund in-home care has become popular over the last few years. Borrowers can utilize a reverse mortgage to establish a monthly payment that will contribute to care costs. This can be a more affordable alternative to selling the home and moving into an assisted living facility, which costs $3,450 per month on average according to the 2013 Genworth Cost of Care Survey.

Would you like to see how much you could be eligible for?  Estimate Your Current Reverse Mortgage Loan Amount.

Reverse Mortgage vs. HELOC

Reverse Mortgage or HELOC – Which is Best? Reverse Mortgages

If you’ve decided to tap into your home equity during retirement, there are a few different ways to go about doing this. Most likely, your options will come down to a Reverse Mortgage or a home equity line of credit, or “HELOC”.

Reverse Mortgage vs. HELOC

A reverse mortgage and a HELOC have a lot in common.

  • Both a reverse mortgage and a HELOC are loans secured by the equity in your home.
  • After taking out a line of credit or a reverse mortgage, you can repay the loan at any time.
  • You will accrue interest over time with both loan types.

There are also some distinct differences.

  • With a HELOC, you will begin making interest payments right away, whereas with a reverse mortgage, you will never need to make a payment until you pass away or move from your home.
  • A HELOC requires a certain credit threshold as well as a minimum level of income. With a reverse mortgage, the borrower’s financial picture is analyzed according to different terms that may consider credit and income, but are not now dependent upon or limited to those factors.
  • The available loan amounts from a HELOC and a reverse mortgage are not the same. You can find out how much you can borrow using online calculators.
  • A reverse mortgage allows for a lump sum option or a line of credit, while a HELOC is always in the form of a line of credit.

The best choice will depend on your financial situation and preferences.

See How Much You May Be Eligible To Borrow With A Reverse Mortgage

Reverse Mortgage Misconceptions

img_supplemental_drugsOver time, many people have developed misconceptions about reverse mortgages based on inaccurate media coverage. The truth is reverse mortgages have never been safer and they’re a viable retirement option when they are understood. Here are several common misconceptions about reverse mortgages as well as the truths behind them.

Misconception: The bank (or government) owns your home.
Truth: The borrower owns the home through the duration of the loan, just like any other mortgage loan.

Misconception: You can outlive your home equity.
Truth: Under the terms of a government-insured Home Equity Conversion Mortgage, you cannot “outlive” your home. You have the right to remain in the home regardless of its value over time, as long as you adhere to the terms of the loan – in particular borrowers need to make sure they have sufficient funds to pay property taxes and hazard insurance.

Misconception: Your kids will lose their inheritance.
Truth: At the point when you move from the home or pass away, your heirs will inherit the home as well as responsibility for repaying the loan. If they choose to keep the home, they must pay or finance the entire loan amount. If they choose not keep the home, their maximum obligation is the selling price of the home. If there is any remaining equity in excess of the amount due, the heirs will inherit that difference.

Misconception: Reverse mortgages are expensive.
Truth: A reverse mortgage comes with insurance costs as well as origination and upfront fees. If you are considering a reverse mortgage, you should compare the costs of a reverse mortgage to the transaction costs of your other alternatives such as selling your home and downsizing, or moving into a retirement community or home.

Things You Need to Know About Estate Planning

The Necessity of Estate Planning14235921-worried-mature-couple-calculating-their-monthly-expenses-at-home

Squaredaway.com, December 3, 2013

Let’s face it, estate planning is not a fun concept to ponder.  Writing up a will is having to pick and choose who in your life is going to get your various assets, and it can’t always be done in perfect impartiality for all of your heirs.  Because of all of these things, people have a tendency to continually put it off and make excuses as to why they haven’t done it yet.  But make no mistake about it, it’s something that is absolutely imperative to get done if you don’t want any more hardship surrounding your passing than there already will be.

That being said, there are probably some things that you might not have taken into consideration when it comes to this uncomfortable task:  What is the difference between a trust and a will?  When it comes to your property, what is the difference between probate and non-probate?  How can you avoid conflict between your children, or between your spouse and your children?  Do I need to worry about Federal Estate Taxes?  Do I need to appoint a power of attorney (did you know there are more than one kind)?  Read the article at the link below to learn more of the things you need to know about estate planning.

http://squaredawayblog.bc.edu/squared-away/estate-planning-101-who-knew/

New HECM Products Giving Borrowers More Options

HECM’s Get Squeezed, Proprietary Products Are LaunchedReverse Mortgages

Reverse Mortgage Daily, December 17th, 2013

The Reverse Mortgage industry has seen some substantial restructuring over the course of 2013.  These changes have been made in an effort to protect the borrower, making it more difficult for them to default on the loan.  Unfortunately, these improvements to the program come with the added drawback of a reduced net amount that can be borrowed, and putting limitations on how the money available to the borrower can be accessed.

Fortunately for those who have been dissuaded from pursuing a Reverse Mortgage due to the changes in the program, two new HECM products have been launched that are giving the potential borrowers some new choices:

The first option, launched by Reverse Mortgage Funding, allows the borrower to access the remaining principle limit in a fixed rate monthly drawdown after year one, which is an option not offered under the current program.  Click here to learn more about the HECM Choice.

The second option, the HECM Fixed Advantage offered by Live Well Financial, will allow the borrower to withdraw, in a lump sum, the remaining funds from a fixed rate Reverse Mortgage on day 366 after funding.  This is as opposed to a borrower being forced to take a variable interest line of credit, term or a tenure payment to obtain the additional funds available after the first year.  Click here to learn more about the HECM Fixed Advantage.

These new offerings are sure to stir up some excitement in the industry.  If you would like NewRetirement to help you find a lender offering these products, please e-mail us at service@newretirement.com or call us toll free at 866-477-0404 and mention that you are interested in exploring the new proprietary HECM products.

FHA Changes Add Stability to Reverse Mortgages

Reverse Mortgages Gaining Popularity?Financial Documents iStock_000009608865X 129x132

The Wall Street Journal MarketWatch, December 17th, 2013

Those who are acquainted with Reverse Mortgages and have been keeping their eye on the industry are probably aware that the FHA has made some changes to the program in the last year.  While the most noticeable change, being able to access a lower percentage of your home value, is somewhat off-putting, the finer print may surprise you.

Where many people think of a Reverse Mortgage as a desperate move for those facing financial dire-straights, the FHA has molded this program into something to be used more like a planning tool for your retirement finances.  Gone are the days when people had the option to shoot themselves in the foot by cashing out half of the value of their home and immediately blowing it on a trip around the world or a weekend in Las Vegas.  Read the article at the link listed below to learn more about how the FHA has added stability to this program, making it harder for people to default.

http://www.marketwatch.com/story/reverse-mortgages-growing-in-popularity-2013-12-17

Senior Program Budget Cuts Making it Harder for Seniors to Stay in Their Homes

Federal Budget Cuts Affecting Seniorsarrow

CNNMoney, November 19th, 2013

For many seniors, being able to stay in their own homes can be their last claim to independence and dignity, and will not be easily let go of.  However, most will readily admit that a little help here and there can be essential to their ability to stay in their homes.  This is why Government funded programs that can give seniors rides to the doctor or grocery store, or even send “companions” to their homes to help with cooking and cleaning, can be the difference between being able to stay home versus having to move into assisted living.

Unfortunately, Federal budget cuts that started in March of this year have cut funding to these programs by up to $80 billion dollars.  The non-profit organizations that head up these programs have definitely been taking notice.  76% of these agencies have stated that these cuts have effectively prevented them from being able to give the proper care that some of these seniors need to be able to stay at home, thus eliminating their option to do so.  Read the article linked below to learn more about how these cuts are affecting our senior citizens.

http://money.cnn.com/2013/11/19/news/economy/budget-cuts-seniors/index.html

Can an Annuity Help You Generate More Retirement Income?

Closing the Retirement Income Gapimg_supplemental_drugs

PBS Newshour, November 2013

The difference between a safe annual retirement income and basic retirement expenses is known as the retirement income gap.  Facing an alarming decrease in American workers who have a pension to count on, many people approaching retirement age are wondering where they are going to be able to find the money to live comfortably.  Where do you turn if you discover your 401k plan and Social Security will not generate enough money for you to enjoy your golden years?

Two good answers to this question, a reverse mortgage or an annuity, unfortunately both seem to have a fairly negative public opinion.  While it’s true that there are plenty of horror stories about either topic, there are likely just as many stories of people utilizing them properly and successfully.  We’ve covered reverse mortgages many times in this blog, so let’s focus on annuities.  For example, have you ever heard of a Single Payment Immediate Annuity before?  Did you even know there are different types of annuities available?  Read the article at the link listed below for more information about the potential benefits of annuities.

http://www.pbs.org/newshour/businessdesk/2013/11/what-if-you-outlive-your-savin.html

2013 Changes to the Reverse Mortgage Industry

Reverse Mortgages Get a HaircutReverse Mortgages

www.morningstar.com, November 5th, 2013

As you may or may not be aware, the Reverse Mortgage industry has gone through a significant makeover in the past year.  While the basics of the Reverse Mortgage are still the same, additional regulations have been passed by the Federal Housing Authority as a direct response to the rate of home defaults going up.  This has changed the amounts that you can qualify for and how you can receive your proceeds.

For those who are not familiar with the Reverse Mortgage program, it is a way for those of the age of 62 and over to cash in on some of the equity in their homes, and use that money in any number of ways.  You must first use it to pay off your remaining mortgage balance or any liens secured by your home (if you have either of these) which can relieve yourself from having to make monthly mortgage payments.  And if you have no mandatory financial obligations, you can have it broken down into monthly payments being sent to you, set up a line of credit that grows over time, or even put the money in your pocket for a rainy day and use it at your discretion.

Read the article at the link listed below to find out more about the new regulations and how they have changed the Reverse Mortgage industry.

http://news.morningstar.com/articlenet/article.aspx?id=617547

Options Available in Assisted Living

Deciding on Assisted Livingolder man on couch with family-Square

The New York Times, October 16th, 2013

If and when a time comes in an elderly person’s life where they are physically incapable of taking proper care of themselves on a day to day basis, steps need to be taken to ensure that, one way or another, the person gets the help that they need.  This can present hardship to all parties involved.  More often than not, it’s the elder person’s children or other family members or friends who want to make sure that the person who took care of them for so long is now properly taken care of.

Often times, that family member or friend’s vision of proper care may differ vastly from the elder person’s vision of the same.  Many of the people in this unfortunate position may be averse to assisted living, even if it’s in their own home.  They may look at it as a stranger coming into their home as opposed to someone who can help.  If moving into an assisted living facility is what looks most beneficial, they may be opposed to that as well, not wanting to leave the only place they’ve called home for so many years.  Read the article at the link listed below to find out for information on the options available to people on both sides of this difficult equation.

http://mobile.nytimes.com/2013/10/16/booming/advice-about-assisted-living-for-aging-relatives-part-1.html



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