Do you know your long-term care options and why to consider financing with a reverse mortgage?

Your road map for long-term care optionsEducation and planning are the keys to making decisions especially when it involves care while aging. You need to be proactive and know what resources and options are available. With the education and a plan you have more options and can be proactive rather than reactive.

As Forest Gump said, “Life is like a box of chocolates, you never know what you’re gonna get.” This is especially true for aging. I was fortunate to participate in and be considered a trusted advisor at a Minnesota Private Duty Home Care Conference, “Keeping Mom and Dad at Home”. During the conference attendees were encouraged to plan the future as they would a trip, looking at what would they put in their suitcase for the journey of aging and be prepared for what isn’t known to happen along the way.

Conference attendees reviewed what is known about seniors and their families. We looked at what is known about seniors:

  • They underestimate their situations
  • They don’t want to worry or be a burden to their children
  • So seniors don’t tell their children what’s going on
  • They want their families help
  • Families often don’t have the time or the financial means to help
  • Role reversal is uncomfortable
  • They are fearful of nursing homes and moving
  • 93% say they want to stay in their home

Then we looked at what we know about the families of seniors:

  • They want to help
  • They are busy; they are the sandwich generation dealing with their own family, careers, life
  • They see changes but don’t know what they mean or what the warning signs are
  • They may become frustrated with their parents denials
  • Role reversal is uncomfortable
  • It’s generally women who are doing the caregiving.

Consider what’s important to the seniors, what do they want for their journey? It’s important to involve the seniors in the process, the plan, and have them agree with the plan. Discuss their wishes along with what you think is needed. What will provide them their security, independence, dignity and control of their life? Including a mediator and/or trusted advisor is a good idea. If they are resistant to bringing someone else in, discussing their options, or accepting outside help, tell them that they may not need this but that you do.

By being educated and having your plan in place if a crisis occurs means more options will be available along with decreased costs. Being reactive at a time of crisis means less options are available along with greater costs. Emotional and reactive decisions make for poor choices and actions made from regret and guilt.

Part of the education and planning means getting the facts. Unfortunately we have been conditioned to think that seniors will end up in a nursing home; that an assisted living facility provides all the care needed; that home care is short-term and the nursing home and/or assisted living is safer than being at home.

We need to recondition our thinking:Receive home care

  • Seniors can live at home indefinitely
  • Home care can provide a nursing level of care at home
  • Living at home can be safer; you receive a 1 to 1 ratio of care versus 1.5 or more of care per person
  • Living at home is affordable

Let’s compare the costs of some options:

Home Care 1 $1,404/month 3-hour visits, 4 days a week, $27/hour
Home Care 2 $3,276/month 4-hour visits, 7 days a week, $27/hour
Home Care 3 $4,914/month 6-hour visits, 7 days a week, $27/hour
Home Care 4 $8,500/month 24-hour or live in care, one-on-one care, $275/day; includes a live in caregiver and frequent visits from a RN
Assisted Living Rent $3,585/1-bedroom/month Care packages range from $300 – $2,700; additional care would be charged per hour by a home care agency
Assisted Living Rent  & Home Care 1 $4,989/month One bedroom apartment rent plus additional care at 3-hour visits, 4 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 2 $6,861/month One bedroom apartment rent plus additional care at 4-hour visits, 7 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 3 $8,499/month One bedroom apartment rent plus additional care at 6-hour visits, 7 days a week, $27/hour from home care agency
Nursing Home $8,000 – $12,000/month Single or double room, level of care and facility amenities

This information and these home care and senior housing figures are a compilation provided by the home care agencies; are approximations and can vary by company and geographic area. Additional home care and senior housing costs were obtained from Genworth Financial, Inc. Cost of Care Survey.

Living in assisted living vs staying at home with a reverse mortgage:

  Selling Staying in home with a Reverse Mortgage
Details: Home Value $200,000; 80 year old borrower   (reverse mortgage funds available will depend on age, generally the older one is more funds available and the program chosen)
Third Party Closing Costs $1,811 $1,811
Less Real Estate Agent/RM Origination Fee & FHA Mortgage Insurance Premium $12,000 (6%) $8,000 (2% origination + 2% FHA MIP)
Net Proceeds $186,119 $102,788 in line of credit; $673 a month tenure-for life of the term of the loan and abiding by the terms of the loan; or term draws structured as needed (based on rates of 2/6/2018; rates change weekly.

Receiving care while remaining at homeNow let’s take the net proceeds and compare living in an Assisted Living to living at home and receiving home care.

Selling and Living in an Assisted Living1 Living at Home using a Reverse Mortgage2
$186,119 ÷ $3,585 (rent only) = $43,020/year or 4 years 4 months

 

 

 

 

 

No remaining equity from home.

No rent or mortgage payment as long as you live in the home as your primary residence

The tenure draw of $673 would cover property charges

Borrower is still responsible for household maintenance, i.e., taxes, insurance, utilities and stay in your home as long as primary residence (i.e., approximately $585/month for a $200,000 home)

May have retained equity depending on how long you stay in the home and the home appreciation.  The loan is non-recourse.

$186,119 ÷ $4,989 (rent and Home Care) = $59, 868/year or 3 years 1 months

No remaining equity from home.

Roof over head; funds to cover home care 1 with term draws from RM = 5 years 4 months3

Additionally it is likely that there would still be retained equity in the home after the 5.3 years.  (Based on 4% appreciation $99,318 in equity would be remaining.)

$186,119 ÷ $6,861 (rent and Home Care 2) = $82,332/year or 2 years 3 months

 

No remaining equity from home.

Roof over head; funds to cover Home Care 2 with term draws from RM = 3 years 4 months3

Additionally it is likely that there would still be retained equity in the home after the 3.33 years.  (Based on 4% appreciation $93,098 in equity would be remaining.)

Then where will you go?

 

 

Some assisted living will accept Medical Assistance or other public programs such as Elderly Waiver, however, your choices may be less.

You can stay in your home and have a roof over your head without rent or mortgage payment even after funds from a reverse mortgage are used.

Medical Assistance or other public programs such as Elderly Waiver or Alternative Care can be received even with a reverse mortgage.  Reverse mortgage does not impact receiving Medicare or Social Security.

1These rates do not take into consideration rent increases (3%-4% annual according to Genworth Financial, Inc.); it’s likely that the number of years the net proceeds would cover will be less.
2With the reverse mortgage there is a growth rate factor that is passed along to the borrower.
3This time can be extended if you are receiving Medical Assistance or other public programs such as Elder Waiver or qualify for Medicare covered Home Care.

You have option to remain at homeYou have choices and can have control over where want to live and the care you receive. You have the right to say, I want to stay in my home (or keep my parents in their home). When educated and with a plan for the journey, life will be easier.

If you’d like to remain at home and have funds for financing your home care, contact us if you are in Minnesota.  As your local broker, we work with several lenders and provide free information and facts with no obligation, meeting in person whenever possible.

For other states, contact your local reverse mortgage specialist who is a broker, one who works with several lenders, has their Broker License/NMLS and preferably holds the Certified Reverse Mortgage Professional (CRMP) designation.

© 2018 Beth Paterson, CRMP, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety and without modifications and includes the contact information, copyright information and the following link: https://wp.me/p4EUZQ-1Ou

Related Articles:

Home for the Holidays…Creating A Wonderful Life for your Older Loved Ones

Home for the Holidays, Staying at homeWith the families gathering for the holidays now is a good time to discuss memories, dreams and desires with our senior loved ones.  One of the most important things to keep in mind is having an understanding of the senior and considering what they want.  As George Santavana stated, “Before you contradict an old man, my fair friend, you should endeavor to understand him.”

Our seniors are valuable to our families and to our society.  They are not just a potted plant in the corner that looks beautiful.  They bring experience, knowledge, history and a sense of who we are.  They have and continue to contribute to our world.  While we treasure other things that are old, we often discount our senior’s opinions, needs and desires.

Sister Mary Germma Brunke wrote, “It is the old apple trees that are decked with the loveliest blossoms. It is the ancient redwoods that rise to majestic heights.  It is the aged wine that tastes the sweetest.  It is ancient coins, stamps and furniture that people seek. It is the old friends that are loved the best.  Thank God for the blessings of age and the wisdom, patience and maturity that go with it.  Old is wonderful!”

Remaining at home with a Reverse MortgageHow can we help make “old” wonderful?  As you are visiting with your loved ones ask them what they remember about moving into the house they first purchased, what they like about the neighborhood.  How do they feel about where they are living now.  Have them share memories of their friends from their youth and what they treasure about the friends in their life now.  What do they cherish?  What has value to them?  What’s important to them?

Have your loved ones define security and find out what gives this security to them.  From their viewpoint what does it mean to be independent?  How do they define dignity in their life?  What do they need to feel they still have control and choices in their life?

Listen to them without making judgments.  If they repeat the same story several times, look at it as a process or stage they are going through.  It doesn’t mean they have dementia, it may just mean that something about that time in their life has a significant impact on their life.  Find out the details of that time of their life and what it means to them now.

There’s a wonderful book by David Solie, M.S., P.A., “How to Say It To Seniors: Closing the Communication Gap with Our Elders” that provides insight into understanding and gives great suggestions on how to have the discussions with your loved ones.

Discuss memories of being in their homeAs you listen to the answers of your loved ones are you discovering that they want to stay in their home?  Are they struggling financially?  Do you need a little extra help with chores or getting out to church or visiting with friends or going to a movie?  Do they need some physical therapy to help be able to do what they desire?  Is nutrition and meals a concern?  Would assistance in bathing be helpful?  Would some medical equipment help them remain at home more comfortably?

There are many options available to help seniors meet their needs and desires.  If they want to stay in their home and need some extra cash, consider a reverse mortgage.  If they want to move to a home closer to you or to downsize, consider using a reverse mortgage for the financing.  If they need some extra help, a home care agency can help them.  Home care agencies provide companion services, meal preparation, medication reminders, bathing and skilled care.  Physical therapy can be brought into the home.  Adult Day Services are an often overlooked option.  And if the family dynamics come into play, a Geriatric Care Manager can help facilitate as well as assist in determining needs and resources.

Senior Companionship“Aging is not ‘lost youth’ but a new stage of opportunity and strength.” (Betty Friedan)  Let’s honor our seniors at this stage of their life with the value they provide to us and with the opportunities available to meet their needs and achieve their desires.

Reading some of my other blog articles will help provide you and your loved ones with information to help their life to be wonderful:

For further details on the reverse mortgage contact us if you are in Minnesota.  As your local broker, we work with several lenders and provide free information and facts with no obligation, meeting in person whenever possible.  For other states, contact your local reverse mortgage specialist who is a broker, one who works with several lenders, has their Broker License/NMLS and preferably holds the Certified Reverse Mortgage Professional (CRMP) designation.

© 2009-2017 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-1Am

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Meet our HECM Reverse Mortgage Borrowers

Couple benefits from eliminating monthly mortgage paymentsThere are numerous ways homeowners use their Home Equity Conversion Mortgage (HECM) proceeds.  Meet our borrowers. . .

Eliminate Mortgage Payments:  Lisa and George** had a small mortgage remaining on their home.  It was difficult to make the monthly payments so they did a Reverse Mortgage to eliminate the payments.  There was a balance that they left in a Line of credit for future use.
(Borrowers are still responsible for paying property taxes, insurance, HOA Dues & maintaining home.)

Maintain Lifestyle:  Helen and Harold did a Reverse Mortgage to afford to take their annual trip to Florida during the winter months.  They are thankful they are able to maintain their lifestyle.

Prepare for Emergency:  Earl and Ruth did a Reverse Mortgage to be prepared for an emergency if something were to happen to one of them.

Protect Other Investments:   To have extra spending money without having to cash out their CDs or other investments, Jerry and Carol decided to do a Reverse Mortgage.

Supplement Retirement Income:  Dale and Kevin were two brothers who lived in the home where they were raised.  Being both were over 62 and owners of the property, they were able to do the Reverse Mortgage to supplement their retirement income.

Eliminate Mortgage Payments*, Home Upgrades and Line of Credit:  Dee and Peter did a reverse mortgage to eliminate their current mortgage payment*, take a lump sum for some home upgrades, receive an extra $300 a month in monthly payments to supplement their Social Security, and still have funds in a line of credit for future use.

Purchase a Car:  Bart and Tina wanted to purchase a new car but didn’t have much in the way of savings.  With a Reverse Mortgage they were able to purchase a car.

Purchase Hearing Aide and Home Repairs:  Joe needed a hearing aide but couldn’t afford it with his Social Security benefits.  Rather than taking money from his savings, he did a Reverse Mortgage.  He also used some of the money to put new siding on his home.

Pay Family Caregivers:  Sam and Frances were both in frail health.  Two of their daughters decided to care for their parents rather than hire outside services.  Since they had quit their jobs and it was affecting their family’s financial situation, Sam and Frances decided to do the Reverse Mortgage and use the funds to pay their daughters for the care they were providing.

Reverse Mortgage provides funds for travelingTraveling:  Helen was struggling to meet her living expenses with just her Social Security Benefits.  She also had always dreamed of traveling.  The Reverse Mortgage provided the extra cash she needed and she was able to fulfill her dreams of traveling.

Not Rely on Children:  Nancy had accrued some debt including some credit cards and borrowing from her children.  She did a Reverse Mortgage to pay off those debts and to have a line of credit available for future needs.  She also enjoyed having some extra cash to purchase some things to fix up her home and to go to lunch with friends on occasion.  Because her children had their own expenses and needs, they were relieved that their mother had done the Reverse Mortgage and could live more comfortably without relying on them.

Home Repairs:  Elaine needed some repairs done to her home.  They were more than she could afford on her limited income.  She did the Reverse Mortgage to pay for the repairs and to have extra funds for supplementing her income.

Home Health Care to Stay In Home:  Robert did not want to go to a nursing home, yet he needed long term care.  George, Robert’s son, decided they should do a Reverse Mortgage to pay for the home health care needed to keep Robert at home where he had raised his children.  Robert is happy because he is living where he chooses.  George is happy the family can fulfill Robert’s wishes of staying in his home and still receive the needed care.

Pay Property Taxes:  Dorothy was behind on her property taxes and facing losing her home to the county.  She did the Reverse Mortgage, paying off her back taxes and setting up a Life Expectancy Set Aside (LESA) to pay her future property taxes and insurance.  She was able to live more comfortably, not depending on her children to assist her.

Pay debts and Have Funds for Future:  Bill and Phyllis were preparing for the future.  They did the Reverse Mortgage to pay off their current mortgage*, the credit card debts, and to have money in their line of credit.  With the money in the line of credit when one of them passes away, the other would be able to change the payment plan to receive monthly payments and continue to live the lifestyle they are currently accustomed to, even without the Social Security of their spouse.

Reverse Mortgage provides funds for every day living expensesFunds for Everyday Living Expenses:  Phil became a “new man” since the Reverse Mortgage was done.  He  now goes out to eat with his friends and works in his yard.

Every Day Living Expenses:  Frank and Emma, a vibrant 90 and 86 year old couple, found that each month they were short money to even buy milk.  Their son-in-law and daughter assisted them in obtaining the Reverse Mortgage.  They are so pleased that they now can live more comfortably.  They used the proceeds to receive monthly payments to supplement their Social Security.  They also took out a lump sum to fix up their home and left enough in their line of credit to use as future needs arise.

Payback Family Loan:  Prior to learning about reverse mortgages, when Mabel couldn’t afford her mortgage payments she borrowed money from her son.  When her son needed the money back, once she learned about reverse mortgages she was able to repay him.  With her son paid off, and with no monthly mortgage payments* she was greatly relieved, felt less financial pressure, and had peace of mind knowing she didn’t owe him money and could remain independent.  During the reverse mortgage process she consulted an elder law attorney.  As a result she now has a will, power of attorney, and her health care directives in place.HECM provides funds for home care

Home Health Care: A reverse mortgage allowed Margaret, who had just been released from the rehab center and needed a home health care aide to assist her, have the funds for the care so she could remain in her home.

Purchase a New Home: Mike and Carol decided they needed a 1 level home to fit their changing health needs, they used the Home Equity Conversion Mortgage HECM for Purchase to purchase their new home instead of using conventional financing.

Wouldn't you like to sit back and relax with Security, Independence, Dignity and Control?Wouldn’t you like to sit back and relax with
Security, Independence, Dignity and Control?

Contact us if you are in Minnesota.  As your local broker, we work with several lenders and provide free information and facts with no obligation, meeting in person whenever possible.

When you decide to do a reverse mortgage make sure you work with a local originator or loan officer who specializes in reverse mortgages, has years of experience and knowledge in reverse mortgages in your state, preferably holds the Certified Reverse mortgage Professional (CRMP) designation, licensed in your state, is a broker, working with various lenders, and is willing to meet with you to review the details, before the application, during the application and at closing.

I would caution about working with an originator from another state who is mailing all the documentation, including the application and not “meeting” with you to explain and review what you are signing. (The lenders in another state may send a notary for application and/or closing – they are not licensed mortgage brokers so can NOT answer questions, they are there only to verify your signature.)  Ask for references and find out if the loan originator will be there for you even after the loan has closed.  If you feel pressured, call another originator.  You can find a list of questions to ask an originator at our webite:  www.RMSIDAC.com.

To ensure that borrowers understand reverse mortgages HUD requires anyone doing a reverse mortgage to complete counseling through a third-party.  They will review the program and discuss other options that may be available.

*Borrowers are still responsible for paying property taxes, insurance, HOA Dues & maintaining home.

**Borrowers’ situations are real; borrowers’ names changed to protect their identity.

© 2017 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-1sL

Related articles:

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Savvy Senior Sources…Talking With Experts TV Show Released

I’m excited to announce the release the new TV show, Savvy Senior Sources…Talking With Experts that I host and produce.  The series of TV shows talk with experts for guiding your way through resources A to V in areas that seniors, their families, caregivers, and trusted advisors will find helpful for planning, aging in place with the ability to stay in their homes and remain independent or where to turn if and when going through the transition. The shows give viewers the opportunity to “meet” the trusted providers of senior services before making a phone call to them.

Brought to you from Savvy Senior Sources, LLC, Reverse Mortgages SIDAC and GWG Life, LLC are proud sponsors of the shows.

Please tune in and subscribe to the YouTube Channel Savvy Senior Sources to be notified when the new shows are broadcast. https://www.youtube.com/channel/UCmgVGVbfY6-RcHkeBc7WmPQ/feed

Enjoy the shows!

© 2015 Beth Paterson, CRMP, Beth’s Reverse Mortgage Blog, 651-762-9648

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Food For Thought to Fulfill Key Roles of Social Workers

Food For Thought For Social Work MonthDuring March we recognize and honor Social Workers for the value they bring to our seniors.

In a variety of roles, with their knowledge and experience in providing resources, social workers assist our seniors. Social Workers are inspiring to improve lives and assisting with problem solving as well as resolving issues that may negatively impact the community. I’d like to offer some food for thought to fulfill their key roles.

Over ninety percent of seniors want to remain in their home. They are comfortable living in the home and community with their memories where they raised their children, know the neighbors, are familiar with the grocery store and the pharmacy. They feel safe and warm in their familiar surroundings. With the home as their identity it gives them comfort being in their long time home. So let’s talk about a couple ways to help fulfill the desires of seniors, improve their lives and help them stay in their home and their community.

Home care services are an option to help seniors who need some assistance to remain in their home. Everything from short time-frames to 24 hour care, including recovery care and respite care or even nursing level of care is available. Home care services can help seniors live at home indefinitely. The one-to-one ratio of care versus 1.5 or more of care per person in a nursing home offers safety.

Their services offer:

  • Companionship and socialization – home care aides can watch TV with them, play cards, do their hobbies, take seniors to the movies or watch them at home, shopping, or even travel with them.
  • Ensuring meals are prepared and eaten even providing someone to talk with during the meal
  • Medication reminders
  • Bathing, housekeeping, running errands
  • Escorting to appointments
  • Anything needed to maintain their life in their home

An assumption is often that one needs to move to assisted living, a nursing home or care center. What is not realized is that rent in assisted living can be $3,000 to $4,000 per month. Additionally home care services are added on to the rent bringing the monthly costs to over $5,000 to $8,000. Nursing home care can run $6,000 to $12,000 a month depending on a single or double room, the facility amenities and level of care.

Wondering how to pay for home care and keep the seniors in their home? A reverse mortgage may be the solution. A reverse mortgage is a home equity loan with special terms for senior homeowners 62 and older. Reverse mortgage facts are:

  • Borrowers own home, no one else does.
  • Seniors can stay in their home as long as it’s their primary residence (in the case of a couple as long as one is still in the home).
  • Borrowers won’t lose their home because of a reverse mortgage if they abide by the terms of the loan – they don’t have to make monthly mortgage payments but do need to pay property taxes, hazard insurance and maintain the property or they may face foreclosure.
  • Funds are generally not considered income for tax purposes.
  • Loan is government insured and guaranteed to be there for them.
  • There is no personal liability to them or their heirs when the loan is repaid, as a non-recourse loan the loan is repaid from the property only.
  • They or their heirs get to keep any remaining equity after the loan is paid off if the home is sold for more than the loan balance.

Consider this…

  • They can access more funds if their mortgage is currently paid off or has a low balance.
  • Their cash flow improves when their current mortgage or lien payment is eliminated.
  • They’ll have extra cash for whatever they need or want!
  • They can still receive Medical Assistance, Elderly Waiver or other public benefits and do a reverse mortgage.

I have often heard how seniors and their families have benefited from using a reverse mortgage to pay for home care. “Once we realized that we could only relieve the stress on us by contracting 24-hour [at home] nursing care for grandma, a reverse mortgage was the only way to do it.” Liz wrote me. Another borrower, Robert, did not want to go to a nursing home, yet he needed long term care. George, Robert’s son, decided they should do a reverse mortgage to pay for the home health care needed to keep Robert at home where he had raised his children. Robert is happy because he is living where he chooses. George is happy the family can fulfill Robert’s wishes of staying in his home and still receive the needed care.

Ruth had ALS and wanted to stay in her home until she passed.  Working with her Social Worker and home care company she did a reverse mortgage. Last week I received a call from her daughter telling me her mom had passed away in her home as she desired.  The reverse mortgage had helped her fulfill the dream of her staying in her home and receiving the 24-hour care she needed.

Giving seniors the freedom to stay in their home fulfills their desires of remaining in their home close to their memories and familiar surroundings. Social Workers offering home care and reverse mortgage options fulfill the Social Workers role of inspiring to improve lives, assisting with problem solving and resolving issues as well as having a positive impact on the community.
Happy Social Work Month to all our social workers!

Originally posted in 2010, Updated 2015
© 2010-2015 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-1c5

Related Articles:

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Our Experiences with Getting Our Reverse Mortgage

Happy With Reverse MortgageActual reverse mortgage borrowers have good things to say about their reverse mortgage experiences.  Let me share what some of our Minnesota reverse mortgage borrowers have said.

Dave shared, “Having had an accident that eliminated my of my teeth, total dental implants was required.  Without a reverse mortgage I could not have raised the money to have the implants done.  It was a great relief to be able to smile again and eat sweet corn again.”

To increase his cash flow Bernie did a reverse mortgage and had this to say, “After talking with 2 other reverse mortgage representatives, receiving apologies for non-functioning DVDs, and talking to an attorney, I chose Reverse Mortgages SIDAC.  It is so helpful to deal with local persons.  Both Beth and Steve followed up with everything.  They were very helpful in personal visits and phone calls.  Beth has also been helpful with other senior issues.”

Larry and Karen* did the reverse mortgage to stabilize their finances.  They found Reverse Mortgages SIDAC to be friendly, courteous and respectful of them.  Additionally they shared they found that all pertinent information was discussed regarding reverse mortgage options and costs and the details were explained so they understood them.  They also felt that they were informed of what to expect during the processing and kept informed of the status through the process.  In addition they said they received explanations of the forms that were signed at closing.  Overall they shared their experience was positive.

Mike shared, “Without the help and knowledge of Beth Paterson who first told me about the reverse mortgage to buy I would never have been able to get our beautiful new townhome, which my wife needs because of her mobility to navigate a lot of stairs.  I owe Beth a big debt of gratitude.  She is the best!  She is knowledgeable and she cares and worked tirelessly for us.”

Wayne recommends us stating, “Reverse Mortgages SIDAC is very customer focused and will settle for no less than what the applicant request’s objectives are.  They knew the “system” very well and lead the borrower though it step by step.  Above all, Reverse Mortgages SIDAC is respectful and honest.”

Helping them out of foreclosure, Gary and Cathy* said, “Thanks so much! Beth and Steve you guys are the best!”

Satisfied Reverse Mortgage BorrowerYvonne wrote, “My experience with Beth and Steve was very enjoyable.  I was always able to reach one of them.  I paid off my mortgage, so eliminated the monthly mortgage payment!  It has made a big difference in my quality of life to have that additional income every month.”

To supplement her income, Marilyn did the reverse mortgage, sharing, “I didn’t really want to have to do this reverse mortgage because I’m too proud.  But thank goodness it was there for me.  Steve was so very helpful as was Beth.  At closing all documents were in order perfectly.  I’m very glad I reached out to this company.  Everything went so well.”

Bonnie did the reverse mortgage to “secure my retirement” allowing her to retire.  Of her experience she said, “Beth and Steve were wonderful!  Caring, efficient, thoughtful. All are words that describe them and their service – I had contacted a nationally advertised company but did not feel at all comfortable with them.  I went with Reverse Mortgages SIDAC because they are local and knowledgeable about Minnesota and my needs here.”

“Having Beth and Steve to guide me through every step of the process was the blessing that made a reverse mortgage possible.  We were able to complete the process in time to obtain the maximum possible funds under the old system, making my dream of remodeling possible,” Matthew stated.

These are just a few of the experiences reverse mortgage borrowers have had.  Keep them in mind as you hear about reverse mortgages and are considering one.  Work with a reverse mortgage originator who is local, specializes and has experience in reverse mortgages, is ethical adhering to the NRMLA pledge and takes their time to give you the details so you understand the reverse mortgage and will have a positive experience and find the benefits.  If you’re in Minnesota, give us a call.

*Some names changed to protect privacy.

© 2015 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-1bu

Without The Reverse Mortgage Money I Would Have Been “Up The Creek Without A Paddle.”

My reverse mortgage was a good decisionI recently received the following letter from a reverse mortgage client of mine outlining why a reverse mortgage was a good decision.

Dear Beth,

I am writing about why a Reverse Mortgage was a good decision for me.  I have had mine since 2010.  My husband died in 2009 and although I was able to keep up with my monthly bills, I would run short of cash when Auto Insurance, Fire Insurance, Property Tax and other unexpected bills would arrive.

My family would always be willing to help me with those bills but I did not want to be a burden to them.  My daughter-in-law Nancy belongs to a Women’s Group with you, Beth Paterson, and suggested that I may want to look into a Reverse Mortgage.  The family was with me throughout the whole procedure and they agreed that it was a good choice for me.

Having a Reverse Mortgage has given me monetary independence and I never realized how important having cash available would be until I fell in October 2013 and broke my right shoulder.  I needed care-givers two times a day.  Without the Reverse Mortgage money I would have been ‘up a creek without a paddle’.  I simply filled out a form, mailed it to the mortgage company and they transferred the needed funds into my bank account.  Financial independence saved the day.

Barbara H.

A reverse mortgage is a mortgage like any other mortgage, using the equity in one’s home, but has special terms for homeowners 62 and over.  There are no income or credit score qualifications for the interest rate and no monthly payments required.  Senior homeowners maintain the title as the reverse mortgage lender does not own the home.  Borrowers are responsible for paying their property taxes and insurance as well as maintaining the home.  Reverse mortgage borrowers are highly protected – more so than with any other loan.

The HECM Adjustable Rate program allows for borrowers to receive their funds in monthly payments, line of credit, lump sum or a combination of these.  The monthly payments can be structured as tenure payments, for life of the loan, or as they need.  The line of credit grows so more funds become available in the future.  There is also a HECM Fixed Rate option which is favorable if one is pulling all their funds out in a lump sum.

As a non-recourse loan there is no personal liability when repaying the loan, the loan is repaid from the property only.  This means if the loan balance when due and payable is $200,000 but the home can only be sold for $150,000 the borrower or the estate do not have to come up with the $50,000 difference.  The loan is generally repaid from the sale of the property when the home is no longer the primary residence of the borrower, usually when they move, die or sell.  If the home is sold for more than the loan balance the remaining equity goes to the borrower or the estate.

Barbara has the line of credit option which, with the growth rate, has grown over time.  The line of credit is there for situations like hers.

Are you or do you know someone who would like to have access to funds providing financial independence and not rely on others?  Consider a reverse mortgage!

*As of April 27, 2015 income and credit are used for the Financial Assessment to determine borrower’s ability and willingness to pay property taxes and insurance into the future

©2014-2015 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-Z2

Related articles:

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

You Don’t Need To Have A Mortgage To Do A Reverse Mortgage

A reverse mortgage is often used to pay off a mortgage which improves the homeowner’s cash flow by eliminating their mortgage payments.  But you don’t have to have a mortgage to “reverse the mortgage.”

You Don't Have To Have A Mortgage To Benefit From A Reverse MortgageMy borrower, Marjorie didn’t have a mortgage on her home but did a reverse mortgage to be prepared for future needs.  She used some of the initial funds to purchase hearing aides and left the rest in a line of credit.  She was happy with her decision to do her reverse mortgage because she now has security knowing she has funds available for her needs, independence to live on her own without relying on her family for financial support, she’s maintained her dignity of being able to pay her own bills, and continues having control of her life and the ability to make her own choices.  She recently took some funds from her line of credit to make a trip from Minnesota to California to visit her daughter who lives there – she wouldn’t have been able to do this without having her reverse mortgage.

A reverse mortgage is a mortgage with special terms for seniors 62 and older that provides them cash for whatever they need or want.  Monthly mortgage payments are not required and income or credit scores are not considered to qualify. The funds can be received in a monthly payment, paid to you, a line of credit with a growth rate, a lump sum or a combination of these.  The loan is due when the home is no longer the primary residence of the borrower(s) or on the 150th birthday of the youngest borrower.  The borrower is still responsible for paying taxes, insurance and maintaining the property.

A reverse mortgage doesn’t mean you are reversing a current mortgage, it means that rather than having to make payments on a mortgage, funds can be available to you without monthly mortgage payments.

The amount loaned is based on the appraised value (determined by a FHA licensed appraiser) or FHA Lending Limit, whichever is lower, the age of the borrower, the expected interest rate and the program chosen.  Any liens or mortgages need to be paid prior to determining the amount available in a line of credit, monthly payments or lump sum.

When there are no current liens or mortgages on a property, more accessible funds are available for borrowers.

As an example, with a $200,000 home value for a 75 year old person and the current interest rate on an adjustable loan (the program that offers the monthly payment, line of credit option, lump sum or combination option; the fixed rate requires all funds be drawn in a lump sum), the amount available after closing costs is $128,805.

The $128,805 can be left in a line of credit or taken in monthly tenure payments of $767, this means you are paid this amount each month as long as you are living in the home as your primary residence.Enjoying remaining at home with a HECM reverse mortgage

If there is a current lien or mortgage that needs to be paid, say in the amount of $50,000, the amount available after paying for the current lien or mortgage and the closing costs is $78,804 which can be left in a line of credit or $469 received in monthly tenure payments.

Either situation can provide security, independence, dignity and control for borrowers but with no current mortgage to be paid off, more accessible funds are available.  The funds can be used for whatever the borrower needs or wants, such as enhancing one’s retirement, home modifications or repairs, medical expenses, home care, or even just giving that extra elbow room.

Some pertinent facts about reverse mortgages:

  • You own the home, no one else does.
  • You won’t lose your home because of a reverse mortgage – you don’t have to make monthly mortgage payments.  If you don’t pay property taxes, insurance, maintain the home or abide by other terms of the loan, the loan may be called due and payable.
  • Tax-free money – consult tax advisor but make sure they know the facts about reverse mortgages
  • The most common reverse mortgage, HUD’s Home Equity Conversion Mortgage or HECM, and only one available in Minnesota, is government insured and funds are guaranteed to be there for you.
  • You or your heirs get to keep any remaining equity after the loan balance is paid off.
  • There is no personal liability to you or your estate when repaying the loan and the loan balance is higher than what the home can be sold for.
  • There are no out of pocket costs other than the cost of the appraisal.
  • Closing costs typically become part of the loan balance.  Closing costs compare to those on a conventional or “forward” mortgage – the difference is the FHA Mortgage Insurance Premium.
  • A credit report is pulled to check for any federal liens or debts that would be required to be paid.
  • You can’t access 100% of your home value at the time of your closing – the amount available is based on your age, your home value or FHA lending limit (currently $625,500), an Expected Interest Rate and the program chosen.
  • The funds may be received in a line of credit, lump sum, monthly payments or a combination of these.
    • Line of credit grows based on the current interest rate plus 1.25%
    • Monthly payments may be received as tenure payments (for life as long as the home is your primary residence) or structured to fit your needs.
  • Historically the interest rate is lower than conventional loans.

Just because you don’t have a current mortgage doesn’t mean a reverse mortgage wouldn’t be beneficial to you.  Consider having security knowing you have funds available during your retirement years with the benefit of improved financial health just like Marjorie did.

© 2012 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-YQ

Related articles:

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

A Reverse Mortgage Can Really Be Compared To Your Smart Phone

Comparing Your Smart Phone To A Reverse MortgageI recently upgraded my phone to a “smart phone.”  There’s lots more features than my old cell phone, lots of “bells and whistles” as they say.  In fact the phone is so smart I’ve had to take classes and talk to the phone representative to learn now to use it and I still don’t understand all of the features.  So how does this compare to a reverse mortgage?

It’s often said that a reverse mortgage is complex and complicated which has a scare factor for some people, including by the Consumer Financial Protections Bureau (CFBP) who claims they are complex and consequently needs additional protections to prevent seniors from making unwise decisions.

At a recent meeting I asked how many understand their conventional mortgage and can explain the terms.  The response was laughs of embarrassment and shaking of heads, and comments that they can’t explain much more than there is interest and they have to make payments and when they are due.  They don’t understand how the interest rate or payment amount is calculated, generally don’t look at the fees or understand what they cover, the risks the lenders and/or investors take, etc.

Do you know how the interest rate and payment was determined on your mortgage?  Do you know what the fees were on your conventional mortgage?  When I’ve shared the Explanation of Closing Costs with borrowers, I’ve been told, “We’ve purchased many homes and no one has explained the fees like this so we understand them.”

The same when purchasing a car and getting financing, one looks at the features of the car but doesn’t necessarily pay attention to the terms of the loan to purchase the car they desire other than the interest and payment and when it’s due.

Yes, the reverse mortgage is “different” than what one usually thinks of for a mortgage.  Based on the FHA insured Home Equity Conversion Mortgage (HECM), the most popular reverse mortgage and only one available in Minnesota, the differences include:

  •  the interest rate is not determined by one’s income, assets or credit scores
  •  there are no monthly mortgage payments required,
  •  the loan is not due until the borrowers are no longer living in their home as their primary residence or on their 150th birthday and they are non-recourse
  • there are many protections including counseling by an independent third-party HUD trained and approved counselor

Like with your smart phone where you’ve had to read, study and get educated on the features and terms to enjoy the benefits, once one does some studying, gets the facts and details from a knowledgeable and experienced reverse mortgage specialist, and goes through the required counseling, one finds that the reverse mortgage isn’t that complicated and there are many benefits.

As with any purchase, a smart phone, a car, a mortgage, a credit card, even an appliance, one needs to be educated on what they are obtaining.  With knowledge one can make educated decisions for their situation and enjoy the benefits of the product without the fear that they are making an unwise decision.

© 2012-2014 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-YO

Related articles:

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Reverse Mortgages Provide Independence

Reverse Mortgages Help Celebrate IndependenceJuly 4th we celebrate Independence Day in America honoring the day our country signed the Declaration of Independence.  Signing the reverse mortgage documents is a way for seniors 62 and older to sign their own declaration of independence.

Independence is defined as “freedom from the control, influence, support, aid, or the like, of others.”  This fits senior’s attitudes, they want to maintain control of their life, make their own decisions and not depend on others for assistance.  They may be short funds for maintaining their lifestyle and sometimes they will eat cat or dog food because it is cheap and they do not want to rely on their children.  Yet I’ll hear, “I want to leave my house as an inheritance to my children.”

Let me share a story of one of my clients, I’ll call them Ted and Anna.  He was 91, she was 87.  Being proud, they didn’t want to discuss their financial situation.  However, their son-in-law finally talked to them about doing a reverse mortgage.  When I met them and we started the reverse mortgage process, the children and I were told they were doing the reverse mortgage so they could put new linoleum on their kitchen floor.  Once the loan was closed I was informed by their children that they had indeed put in the new linoleum along with new windows and they bought some new furniture.  The kids were going to Ted and Anna’s and were told, “Don’t pull in the drive way, we just had it blacktopped.”  When Ted and Anna went out to eat with their kids, they could pay for their kid’s meals too making them feel good that they could treat their children to a meal.  Then one day the mother and daughter were sitting at the kitchen table and mom shared that before their reverse mortgage they used to go 3 days at the end of month without food or even milk because they would run out of money from their Social Security.  As they were sitting there and looking at the paper, mom exclaimed, “Look, Depends are on sale, I can now stock up.”

While Ted and Anna were too proud to let their children know their financial situation and they didn’t want to depend on them to assist with their living expenses, once they signed the reverse mortgage documents they kept their independence and had funds for their needs and desires.  This also improved their dignity.

Unfortunately while not wanting to rely on their children and wanting to leave their home as an inheritance to their children, seniors are doing without.  This isn’t what their kids want – they don’t want their parents doing without so they can have an inheritance.  Kids actually want their parents to have funds to remain independent.

Then we have the kids who are taking care of their parents by paying for groceries, meals when they go out, paying their bills, taking time from their busy schedules to clean their house, provide home care, and helping meet their other needs.  This can have a negative impact on these kids’ finances.  Yet their parents don’t want to use the equity in their home and do a reverse mortgage now just so they can leave an inheritance for these kids.  In essence the kids are using their funds to take care of their parents now in exchange for an inheritance after their parents are gone.

Neither one of these scenarios make sense.  Why be insistent on leaving an inheritance to the kids while you’re doing without now?  Why depend on your kids and use their money to take care of you today so you can leave them an inheritance?  They want you to have your independence now and they aren’t looking for the inheritance when you need to funds now.  Actually the best inheritance you can leave your children would be to take care of yourself so they don’t have to worry about you.Celebrate with a reverse mortgage

Improve your cash flow during your retirement – sign your own Declaration of Independence with a reverse mortgage – then celebrate your independence.

© 2009-2012 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-YM

Related articles:

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.