Monthly Archives: September 2009

Is your opinion of reverse mortgages denying seniors?

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As you are advising seniors do you advise them based on your opinion of reverse mortgages?  Do you believe that reverse mortgages are expensive?  Do you believe it’s foolish to do a reverse mortgage because of the “high” costs and a “better solution” would be sell?  Do you believe it is more practical for a senior to move in with an adult child?  Do you believe they should consider a conventional mortgage instead of a reverse mortgage?  Or get some financial assistance from their child?  Are you criticizing seniors for doing a reverse mortgage and not selling or finding financing from another resource?

While sometimes the cold hard financial facts may demonstrate a better solution than the reverse mortgage.  However, have you considered what the senior’s desires are?  What about their comfort and happiness?  Do they really want to sell?  Do they really want to live in senior housing?  Would they really be comfortable living with a relative?  Would they really be happy if they moved out of the home and community they are familiar with and comfortable in?  And what impact would receiving financial assistance from a child have on the child’s financial situation?  What is going to give the senior their security, independence, dignity, and control?  Advising based on your opinions is denying seniors their comfort and happiness as well as their control and choice.

Being familiar with their surroundings, their community, having the bank and grocery store down the street may give comfort to a senior.  The neighbor may help with the yard work, watching out for them, bringing them a meal once in awhile.  Their choice may be to stay in their home because that is what brings them comfort and makes them happy.  They may feel more secure living in their familiar surroundings.

Moving in with an adult child can mean a loss of independence, dignity, and control for a senior.  There could be additional stress and more of a financial burden on the child.

Having a child provide financial assistance through just providing funds or a sale lease back could have a negative impact on both the senior and the child.  The senior will have lost some of their independence and dignity by depending on their child.  The child’s situation may change and they may not be able to afford the financial assistance in the future.  If it’s a sale lease back situation, the child may need to sell to meet their own financial circumstances which could displace the senior.  Which would mean the senior’s security would be at stake.

I know a woman who sold her home to her daughter and son-in-law with the agreement that she could continue to live there.  When the children moved in to the home that had been hers for years the daughter and her husband took over the main living area and she had to move her belongings to the basement and a different bedroom.  They started redoing the yard, not necessarily a bad thing but since they were now the owners they were making changes she was not comfortable with.  Additionally they have parties every weekend which disturbs her peace and quite.  Unfortunately she is no longer comfortable and happy living in “her” home.  This in the long run is affecting her peace of mind and her health.  She no longer has her independence, dignity or control of her living situation.  And her security could be in jeopardy if the children decide they want the house to them selves and require her to move out.

A reverse mortgage helps seniors with their many financial needs including paying off current mortgage payments, repairing or modifying the home, covering their basic month to month living expenses, paying for home health care or medical expenses.

Before you base your advice on your opinion of reverse mortgages, know the facts: “When You Don’t Know What You Don’t Know About Reverse Mortgages” and some of my other Blog posts will help you with this.  Read “Reverse Mortgage Closing Costs – High or Mythical?” to see that reverse mortgage costs compare to conventional mortgage costs.  “I Want To Stay In My Home – Don’t Tell Me To Sell!” will help you understand that selling and moving is not less expensive and may have negative consequences in the future.  And to get a better understanding on how the reverse mortgage provides, security, independence, dignity and control read, “Know A Senior Who Wants Security, Independence, Dignity, And Control?  A Reverse Mortgage May Be The Answer.”

While you may believe the best solution would be for a senior to sell, move in with a relative, or do a conventional mortgage, consider what will provide comfort and happiness for the senior as well as what will meet their desires.  Don’t let your opinion of reverse mortgages deny seniors.  It’s their personal choice on how and where they choose to live.

© 2009 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-7s

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.

Know a Senior Who Wants Security, Independence, Dignity, and Control? A Reverse Mortgage May Be The Answer!

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Reverse Mortgage Help Their Lifestyle

A Reverse Mortgage Helps Their Lifestyle

When Andrew and Harriet, both in their 70’s, went to their bank to inquire about refinancing their current loan, their banker suggested a reverse mortgage and referred them to us at Reverse Mortgages SIDAC.  They needed some additional funds for home repairs including a new energy efficient furnace.  Anticipating future medical expenses, they liked the idea that with the reverse mortgage they could get money for their immediate needs, eliminate their mortgage payment, and still have funds for their future needs by having a line of credit.

They decided to do a reverse mortgage with the understanding that they would still own their home (as they do with their current mortgage), monthly mortgage payments aren’t required, and the interest rate is lower than they could qualify for on a regular loan (adjustable rate currently under 4%).  They understand they continue to be responsible for their taxes, homeowners insurance, and maintenance of the property and don’t have to repay the loan until the home is no longer their primary residence.  They liked the idea that even if one of them goes into the nursing home, the other one can stay in the home.  Additionally, it was appealing that the funds are tax-free*, Social Security and Medicare are not affected and Medical Assistance and other public benefits can still be received.

A mortgage with special terms for homeowners 62 and older, a reverse mortgage has no income or credit score qualifications** (See below for Financial Assessment requirement as of April 2015.) and a low interest rate, which offers many advantages for senior homeowners.  Allowing access to cash from the equity of the home to use now and pay back when the home is no longer the primary residence of borrower(s), when the home is sold any remaining equity goes to the borrower or their heirs.  With the reverse mortgage, if the loan balance is higher than the home can be sold for there is no personal liability to borrowers or their heirs as long as the borrower or estate are not retaining ownership.

“When a friend told me she was doing a reverse mortgage I thought, that sounds really good.  I thought, if I do a reverse mortgage, I could do some things to my home, and maybe take a vacation.  After everything was explained to me and my children in detail and in words I could understand I did a reverse mortgage.  I now am getting new windows and siding and am going on vacation with my daughter,” said Judy in St. Paul.

Happy to Repay Son-In-Law from Reverse Mortgage

Happy to Repay Son-In-Law from Reverse Mortgage

A few years ago Patricia had borrowed money from her son-in-law, Brad, to pay off a loan.  Then Brad needed the money back for his own purposes.  After consulting her family and an attorney, she did the reverse mortgage.  She told us she was greatly relieved and the pressure was off her now that she no longer owed Brad money and wasn’t dependent on him.  She added as a result of consulting the attorney, “Other good benefits are that I tended to my will being made, my health directives done, and a trust fund set up.  All that is done now and I’m prepared for the future.”

The factors used to determine how much is loaned to borrowers include the home value or FHA lending limit ($625,500 through the end of 2009), the age of the borrower (the older one is the more funds they can receive), and an Expected Interest Rate.  If one doesn’t have a mortgage on their home they benefit from having more funds available to them. Cash flow will improve when the current mortgage payment is eliminated if one does have a current mortgage on their home.

Even though home values may be lower at this time, it is still a good time to do a reverse mortgage because the interest rates are so low.  When the home values go back up, it will mean there could be additional equity in the home.  If one waits to do the reverse mortgage until home values go up, the interest may be higher and consequently less funds available.

As with a conventional loan, there are traditional closing costs including an origination fee, appraisal, title fees, title insurance and recording fees.  With the FHA insured, Home Equity Conversion Mortgage (HECM) borrowers pay a mortgage insurance premium.  Because the fees are up-front, they are often perceived as high.  However, in the big picture the reverse mortgage may cost less because of the much lower interest rates historically available to borrowers with the adjustable rate.

“It was a blessing when we heard of reverse mortgages.  We were behind in the property taxes and mortgage payments and faced foreclosure.  We were really in a mess.  The reverse mortgage cleared it all up and has lifted a weight from us that we can live in the house and not worry,” said Gwen and Robert.

A reverse mortgage has allowed thousands of Minnesota seniors to remain in their home with security, independence, dignity and control even during trying times.  And if you know a senior who wants to sit back and relax with security, independence, dignity, and control, a reverse mortgage may be their answer.

*consult tax advisor who is familiar with reverse mortgages

**In April 2015 a Financial Assessment was implemented to determine borrower’s ability and willingness to pay property taxes and insurance into the future.  This safeguard help make the reverse mortgage more sustainable so borrowers can remain in their home.

© 2009-2016 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-68

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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.

Who Are We To Judge How Reverse Mortgage Funds Should Be Used?

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The media and politicians are stating reverse mortgage funds shouldn’t be used for pleasure items such as vacations, giving to children, buying a car, boat or RV.  Yes, if a borrower uses their funds now for pleasure items, give money to their children or grandchildren, or even on bills or other expenses, there is a chance they won’t have funds at a later date.  Seniors, as anyone, should use their funds wisely.  But who are ‘we’ (media, politicians, lenders, counselors, attorneys, public, etc.) to judge and make decisions on how one’s funds should be used?  Do you want someone else making decisions for you?  Do you want the media, politicians, your friends, a lender or counselor to tell you that you can’t take a dream vacation because you may not have funds for your medical bills or housing at a future date?

Reverse Mortgage Allowed Travel to Florida

Reverse Mortgage Allowed Escape from Cold MN Winter & Travel to Florida

Larry and Lori did a reverse mortgage so they could continue to travel to Florida every winter.  The reverse mortgage allowed them to continue their lifestyle of escaping the cold Minnesota winters and to visit family in Florida.  Who are ‘we’ to determine whether this was right or not?  When their health started failing, they could no longer make the trips however the reverse mortgage gave them those extra years of travel and the security to be able to do so.

Two days after closing her reverse mortgage, Jane was on a flight to England to fulfill her dream of seeing a play that was ending the weekend after the closing.  The reverse mortgage made that dream a reality.   Were we to take control and choice away from her and say this was the wrong use of reverse mortgage funds “just because” in future years she may need funds for “something” else?  Were ‘we’ to take that dream away even if she might never be short funds for who knows what in the future?

We talk about creating a “bucket list” – the things we want to do before we die.  After working for years, raising families, serving their country why can’t a senior use their reverse mortgage funds to check an item or items off their “bucket list” while they are still healthy and able to fulfill their dream?  Seniors shouldn’t be treated like children, as one who can’t make their own decisions.  Living on this earth for many years does not mean one can’t make their own decisions.  If for some reason they cannot, then they should have a conservator appointed.

After his wife died, Bob did the reverse mortgage to replace the additional income lost from her Social Security.  Catching up on bills, with peace of mind of having extra cash flow each month by receiving monthly payments, he was so excited that he could also take a dream vacation and go to Yellowstone.  Taking the trip with his nephew last summer, months later he is still glowing that he was able to fulfill his dream.  Was this a “wrong” decision on his part?  Were we supposed to kill his dream?

Carl was in need of a new car.  Because he didn’t want to make car payments, he did the reverse mortgage to meet this need of purchasing a new car without having a monthly payment.  He’s still able to drive, should ‘we’ deny him his dignity and independence and say he shouldn’t purchase this car just because he is older and may have a need of funds for who knows what in the future?

If YOU, at age 30, 40, or 50, take a vacation today, are you aware that you may not have funds for your mortgage payment (or rent if you’re a renter) or living expenses, medical bills, etc. at some future date?  What if you take a vacation today and next month you are in a car accident and left disabled or diagnosed with cancer and can’t work, make your mortgage or rent payment, and pay your bills?  Since this is a possibility for any one of us, do you not take that vacation just because this could happen to you?  We all need to act responsibly but if we live totally as if the worse is going to happen to us no one would “live” life today – we would just live in a cocoon not really living.

If you, at age 30, 40 or 50, were forced to pay off your mortgage how much money would you have for “life” – pay for food, clothes; daily needs such as soap, shampoo, hair cuts; utilities; taxes; maintain your home; automobile, gas and auto insurance; health insurance and medical expenses; go out to eat; take your vacation, etc.?  Since everyone who has a mortgage is using the equity of their home for these purposes, I bet you would have a very different lifestyle if you weren’t using the equity in your home to maintain your lifestyle – whether a senior or you or me.  The media and politicians need to stop judging the decisions seniors make on how they use the equity in their home, just because they are a senior doesn’t mean they can’t make their own decisions or mean they need to live in that cocoon either.

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Reverse Mortgage made it possible to attend family weddings

Bonnie did a reverse mortgage to pay off her forward mortgage and improve her cash flow.  Years after the closing of her loan, Bonnie wrote, “A reverse mortgage has brought me bountiful solutions to resolving financial issues.  Its benefits enabled me to achieve the means to better enjoy living in my own home.  The equity available was spent in several areas for home improvement.  Herewith also were personal challenges, as a pledge to my church fulfilled and travel to family weddings and reunions assured.

“With a reverse mortgage you begin to have independence anew and you begin to feel more secure.  Being free from monetary anxiety you have better control over spending your equity.  Thus a respect for yourself increases.”

Are you going to say these personal uses of her reverse mortgage funds were wrong?  Who are you or I to judge?  I certainly don’t want someone to tell me how to use the funds from my mortgage.  And I don’t want to tell a senior that they shouldn’t use their reverse mortgage funds to fulfill their dreams just because someone else doesn’t use their funds wisely or because they may not have funds for who knows what in the future.

With all of this said, I do believe it is important one should plan for what may happen in the future and everyone should use their funds wisely.  An elder law attorney, financial advisor, and CPA educated in senior issues and reverse mortgages* can help seniors plan and think through their situations to help them make the best decisions for their circumstances.  Note, I said help, not make the decisions for them. In the end, it should be the individual senior’s decision on what they choose to do with their reverse mortgage (or any) funds.

*They need to be educated with the facts from a reverse mortgage expert, not the media, politicians, word-of-mouth, etc. or they could be guiding the senior to make bad decisions.

© 2009 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-6g

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.

It is NOT Reverse Mortgage Fraud When…

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You may have seen some headlines about reverse mortgage fraud.  But I want to clarify that what is often being called reverse mortgage fraud is not really reverse mortgage fraud.

  • It is NOT reverse mortgage fraud when a senior who has a reverse mortgage and has a child or grandchild who scams their parent of money.  It is theft, financial exploitation, and abuse by the child or grandchild!  Children and grandchildren also steal, financially exploit and/or abuse seniors who don’t have a reverse mortgage.
  • It is NOT reverse mortgage fraud if a Power of Attorney misuses the funds from a senior’s reverse mortgage.  It is financial exploitation and abuse by the Power of Attorney, not of, or because of, the reverse mortgage.
  • It is NOT reverse mortgage fraud when a title company’s closer doesn’t follow the regulations (as the story in the recent Wall Street Journal reported) and they take the money the lender sent to pay off a borrower’s current liens.  It is theft and fraud by a title company’s closer and can, and has, happened with conventional loans.

As unfortunate as these situations are, they are NOT reverse mortgage fraud and the media should not call it such.

Let’s look at an analogy:  If a store selling TV’s is robbed because the thief was enticed and wanted the TV it is the person who did the stealing that committed the crime, not the TV manufacturer.  In this scenario the store represents the senior, both are victims.  The money or reverse mortgage funds are represented by the TV.  And the lender, provider of the reverse mortgage funds is represented by the TV manufacturer and provider of the merchandise.TV

So this is not fraud by the TV manufacture just because the thief stole the manufacturer’s TV.  Nor is it reverse mortgage fraud just because the reverse mortgage provided the funds for someone to steal from or abuse a senior.

Do you we see the media publishing articles that TV manufactures committed fraud when one of their TV’s was stolen?   Then why does the media and politicians accuse reverse mortgage lenders of fraud when someone else is committing the crime?  Why are the words reverse mortgage used in the same sentence as fraud in these types of circumstances?

For the facts the media should know read my previous posts:

© 2009 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-5O

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.