Category Archives: Reverse Mortgage Home Purchase

Reverse Mortgages Give Reasons For Hope

Posted on by

Reverse Mortgage Gives Reason for Hope

As I was reflecting on the hope that this season brings I got to thinking about the reasons the reverse mortgage gives hope to seniors. Here are some of the reasons for hope with a reverse mortgage. Yes, the list is long but seniors have a long list of wants and needs for hope. With a reverse mortgage one will be able to:

• Stay in one’s home where they may have raised their family, are familiar with the neighborhood and their neighbors and where they usually want to remain.

• Pay off a current mortgage to eliminate the monthly principal and interest of mortgage payments. Have payment flexibility; choose if, when and how much you pay, lowering the loan balance and creating a line of credit which grows allowing more funds for in the future.

• Protect other investments/Hedge against longevity risk.

• Have funds for emergencies and/or long-term care.

• Have improved cash flow with no monthly mortgage payments. (Still have to pay property taxes and hazard insurance, flood and HOA dues if applicable.)

• Protect some of their other retirement funds or investments where there might be taxes or penalties on withdrawals.

Purchase a new one-level home to meet changing health needs

• Purchase a new home to downsize and/or move closer to family

• Have funds for making home improvements or home modifications.

• Retire and not feeling like you have to work just to have money to pay the bills.

• Have cash flow to be able to pay taxes.

• Have funds to pay for home health care.

Reverse Mortgage pays for home care or companion care

• Have funds for some assistance with home care or companion services.

• Have funds for adult day services.

• Have funds for medical expenses and prescriptions.

• Afford going to the dentist.

• Afford new eye glasses.

• Have funds for the needed hearing aid.

• Have funds to cover long term care expenses.

• Cover everyday living expenses.

• Not rely on credit cards.

• Not rely on children.

• Payoff spouse in a divorce.

• Use in probate for an heir to purchase home and pay off other heirs.

HECM Reverse Mortgage Provides funds for extras in life

• Have funds for the little extras in life, like:
○ getting one’s hair done,
○ having cable TV,
○ buying groceries,
○ going to lunch with friends,
○ treating their children to dinner,
○ going to community plays or the theater or a concert,
○ taking the grandchildren to the zoo or a movie,
○ Depends (I had a client say with their reverse mortgage they could now afford to buy Depends),
○ being able to do hobbies.

• Purchase a more dependable car.

• Afford transportation if one can no longer drive.

Afford to travel for family wedding or reunion with a reverse mortgage

• Afford the travel for the family wedding or reunion.

• Take the vacation they have dreamed of all their life.

• Have funds for emergencies.

• Reduce financial stress.

• Save one’s home when faced with foreclosure or tax forfeiture.

• Have funds to full fill needs and goals.

• To live with security, independence, dignity and control.

I have helped seniors where a reverse mortgage has fulfilled all of these reasons and more, providing hope for their future. A reverse mortgage has given hope to thousands of Minnesota seniors so they can remain in their home with security, independence, dignity and control even during trying times. If you know a senior who is looking for hope for one or more of the above reasons, a reverse mortgage may be their answer.

Would you like to explore a reverse mortgage for your situation? 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.

© 2019 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 without modifications and includes the contact information, copyright information and the following link: https://wp.me/p4EUZQ-2CC

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.

Reasons to obtain a Reverse Mortgage

Posted on by

  • Reverse mortgage provides funds to enjoy retirement and have funds for future

I often hear that people think the reverse mortgage is only for those with an immediate need on their current home. While this is one reason one obtains a reverse mortgage, there are five general reasons to obtain a reverse mortgage. Let’s explore all of these.

  • Needs based or improving cash flow: Need funds immediately for covering living expenses or wants to eliminate the current mortgage payments.

Lisa and George had a small mortgage remaining on their home. It was difficult to make the monthly payments so they obtained a reverse mortgage to eliminate the payments. There were remaining proceeds that they left in a Line of credit for future use. And they are still paying their property taxes and insurance.

Joe needed a hearing aide but couldn’t afford it with his Social Security benefits. Rather than taking money from his savings, he obtained a reverse mortgage. He also used some of the money to put new siding on his home.

  • Maintaining lifestyle: Having funds for travel, buying a car, purchasing vacation home; fulfilling dreams or meeting goals.
To fulfill dream of traveling Helen obtained a reverse mortgage

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

Bob’s wife passed away so her Social Security was no longer received. To replace the 2nd Social Security check his financial advisor suggested a reverse mortgage so he could stay in his home and maintain his lifestyle. The reverse mortgage paid off his current conventional mortgage and eliminated his mortgage payments – this improved his cash flow. Then Monthly Draws were set up to add the extra money he needed each month to maintain his lifestyle. Additionally funds were left in the line of credit for future needs.

  • Protecting or delaying draws from other investments: Using the reverse mortgage to tap home equity rather than accessing other investments or retirement funds that may have penalties or are taxable; let the investments or retirement funds grow so more retirement funds are available later in one’s life; use the home equity so other investments can be left as the inheritance.

Dorothy closed on her Home Equity Conversion Mortgage (HECM) reverse mortgage as a tool to strategically manage her assets and the benefits she has received from her reverse mortgage. She’s used the funds for home repairs and travel, and hasn’t had to use her investments.

Reverse mortgage provides funds to enjoy retirement and have funds for future

In their mid-70’s, Pat and Mary planned for their retirement. But as their life changed they found there wasn’t enough money to last through the end of the month. With the reverse mortgage in place providing monthly cash flow and a line of credit for other needs, Pat and Mary’s retirement funds may be protected for their future. They are living their retirement years with a good plan along with funds for their current needs. Now they have more money at the end of the month – what a way to live in retirement!

Ray used a reverse mortgage on his primary residence to build a new lake home. Using the reverse mortgage for this purpose meant he didn’t have to tap into other retirement investments, yet created a new investment. His plan is in 10 years to start using his other retirement funds.

  • Planning for financial or long-term care needs (Standby reverse mortgage): Taking the reverse mortgage at a younger age then leaving in the line of credit, which grows to have funds to draw from in the future when “life happens.”

Charles and Sharon both in their early 60’s used the reverse mortgage to pay off their conventional mortgage. Since they were still working, they continued to make payments on their reverse mortgage. Their plan is to pay down the reverse mortgage loan balance and increase their line of credit so it grows for their future long-term care needs.

  • Purchasing a new home: Whether downsizing, moving closer to family or buying a dream home or investment property, the reverse mortgage can be used for the financing.
Purchase a new one-level home to meet changing health needs

Richard and Lou needed a one-level home to eliminate stairs that were getting hard to navigate. Instead of using conventional financing or paying cash, they used the HECM for Purchase (H4P) Adjustable Rate. Using cash from the sale and the H4P, they were able to purchase their dream home at a higher value than paying cash would have allowed, have funds for moving expenses and still have funds in a line of credit.

Mike and Carol decided they needed a one-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. This benefitted their cash flow and meant they didn’t have to tap other retirement funds.

Jim and Paula used the fixed rate reverse mortgage to purchase a new home closer to their children.

Would you like to explore a reverse mortgage for your situation? 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.

© 2019 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 without modifications and includes the contact information, copyright information and the following link: https://wp.me/p4EUZQ-2AP

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.

Free Webinar on using a HECM for Purchase for your older home buyer’s

Posted on by





Using Reverse Mortgage to Purchase New HomeThe National Reverse Mortgage Lender Association (NRMLA) is hosting a free webinar on using a reverse mortgage to purchase a new home during the 3rd annual Reverse Mortgage Education Week.  Reverse Mortgage Education Week is dedicated to teaching more people about the benefits of reverse mortgages, how they work, and how loan proceeds can be used to support aging in place.

Typically older homebuyers aged 62 and older, who don’t usually qualify for a conventional mortgage, or want a monthly mortgage payment, would need to pay cash for their new home.  However, there is another option, FHA’s Home Equity Conversion Mortgage (HECM) for purchase, H4P.

Seniors have used the H4P to purchase their dream home, downsize to a home more convenient for their changing health needs and move closer to their children.

Richard and Lou needed a one-level home to eliminate stairs that were getting hard to navigate.  Instead of using conventional financing or paying cash, they used the HECM for Purchase (H4P) Adjustable Rate.  Using cash from the sale and the H4P, they were able to purchase their dream home at a higher value than paying cash would have allowed, have funds for moving expenses and still have funds in a line of credit.

Join us for “Serving the Boomer Market: Guidance for Meeting Older Buyers Needs with HECM for Purchase,” an informational webinar for Realtors and agents who work with older buyers. NRMLA CRMPs Chris Bruser and Christina Harmes, Realtor Scott Degnan, and Scott Owens the General Manager of an active adult community, will explain the process for using a reverse mortgage to purchase a home and provide examples of how buyers, and sellers, can benefit from H4P.

What: Free Webinar: Serving the Boomer Market: Guidance for Meeting Older Buyers’ Needs with HECM for Purchase
When: April 24, 2018, 1:00 – 2:00 PM ET
Registration: http://bit.ly/2GxO56u

For more background on reverse mortgage loans and HECM for Purchase, take a look at these resources and media coverage that shows how the responsible use of a reverse mortgage can enhance a retirement plan:

NRMLA’s  Reverse Mortgage Education Week runs from April 23rd-27th. Check here for the calendar of all webinars.

If you’d like to learn how to utilize a reverse mortgage to purchase a new home, 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-1G5

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.

 





How Can A Reverse Mortgage Be Used In One’s Financial Plan?

Posted on by





Using Reverse Mortgage for financial planningIn a perfect world, ideally it is to not have debt of any kind including no mortgages, having a huge retirement portfolio to cover one’s lifestyle and long-term care costs.

However, in the real world, many who have thought they have saved for retirement find that when “life happens” they use those funds quickly. The reverse mortgage is a tool for planning for retirement and long-term care costs as well as more immediate needs. This way they have a plan and funds for when “life happens.”

Financial advisors, planners, insurance agents, wealth managers, estate planners, tax advisors and other financial professionals are realizing the value of using one’s home equity, especially the HECM reverse mortgage, to be part of one’s plan. There is even some discussion on the importance discussing the reverse mortgage as an option for one’s retirement plan by professors of finance at various universities.

Here are some ways a reverse mortgage could be utilized as part of one’s retirement plan.

Protect other investments/Hedge against longevity risk – With the reverse mortgage in place and having cash available, borrowers’ can protect their other investments and retirement portfolios to hedge against longevity risk if those decrease or not have to draw on those, especially in a down market. They can still have cash flow yet save the investments for future use or use those funds for an inheritance.

Eliminate current mortgage payment – By using the reverse mortgage to pay off the current mortgage it allows one to improve their cash flow and have more flexibility for their retirement planning. (Borrowers are still responsible for paying property taxes and hazard insurance.)

Payment flexibility – Payments on the reverse mortgage are not required. However borrowers can choose to make payments in an amount they choose and when they choose. If they use the reverse mortgage to pay off their current mortgage and then continue making payments, the payment will reduce the loan balance and be applied to their line of credit. The funds in the line of credit will grow, meaning they will have funds in the future to re-borrow without refinancing and having to pay closing costs again.

Another big plus with the payment flexibility is if one can’t make a payment because they are no longer working or have a medical expense, they will have better cash flow management.

Use Reverse Mortgage for Long-term careFunds for emergencies and/or long-term care – The HECM Adjustable Rate has a line of credit option with a growth rate. Taking out the reverse mortgage at an earlier age and leaving the line of credit to grow will provide more funds for emergencies and/or later when it’s likely they will need long-term care.

Purchase a new home – Rather than using cash, other retirement funds or a conventional mortgage, the HECM reverse mortgage for purchase (H4P) offers a stronger strategy. See page 19 for more details.

Proceeds are not taxable income – Because it is a loan, the reverse mortgage proceeds are not considered income and therefore not taxable. Therefore one can draw from the line of credit and not have the tax liability unlike some other retirement investments may have.

Continue working but have funds when not able to – Doing the reverse mortgage with a line of credit now could mean more funds available in the future. Borrowers can choose to continue working but when they can’t work anymore, or choose not to, they could have funds to replace their income.

While working they could choose to make payments on their reverse mortgage but then stop making payments when no longer working and take monthly draws or draws as needed to replace their work income.

Social Security claims – With the reverse mortgage in place the proceeds could replace the Social Security income when one spouse passes and they lost the 2nd Social Security income. They could set up receiving monthly payments so their cash flow continues allowing them to maintain their lifestyle.

One could use reverse mortgage proceeds to delay taking Social Security as part of their plan meaning they would increase their monthly Social Security benefits. The CFPB has cautioned about this strategy. Borrowers should consult with their financial advisors to determine if this would be a strategy for them and what is best for their situation.

Available funds even with lower home value – Because the funds are guaranteed to be available based on the home value at the time of closing (FHA insurance benefit), if home values decline (remember 2008?), the reverse mortgage borrower could still have access to more funds than the value of the home and the line of credit will continue to grow even if the home value declines.

With reverse mortgage don't have to rely on childrenNot depend on children – If one needs addition funds for maintaining lifestyle, medical expenses, long-term care, etc, the reverse mortgage could provide funds so they don’t have to rely on their children.

If children want to tap their financial portfolio to help care for their parents, a reverse mortgage on the parents home may be a better plan; providing funds for the parents needs and preserving the child’s portfolio for their own future.

Long-term Care Insurance – One may not qualify for long-term care insurance or afford the premiums so the reverse mortgage line of credit could act as an “insurance” to cover the long-care needs.

If one does qualify for long-term care insurance, the reverse mortgage line of credit could provide funds allowing a higher long-term care insurance deductible and a longer waiting period before drawing from the long-term care insurance.

Payoff spouse in a divorce – The reverse mortgage can be used to pay off a spouse going through a divorce, allowing one spouse to remain in the home.

Use in probate – In the case of the death of a parent, the reverse mortgage could be used to pay off a sibling or siblings so one can remain in the home or purchase the family home. This is beneficial when one child has been living in the home and taking care of the parent(s), and wants to remain in the home.

I am not a financial planner/advisor, accounting advisor/CPA or an attorney. This information is provided as ideas to use for one’s plan. One should consult with their financial, accounting and/or legal advisor on what works for their situation.

If you’d like to improve your retirement cash flow now or for the future, 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-1DT

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.





Do You Realize How A HECM Reverse Mortgage Compares to A Conventional Mortgage?

Posted on by





Comparing HECM Reverse Mortgage to a Conventional MortgageMost people have, or had, a conventional mortgage using them to purchase their home or have refinanced …yet the reverse mortgage is often misunderstood.

A reverse mortgage is a mortgage where the lender puts a lien against the property, just like conventional mortgage, but with special terms for those 62 and older.

The Home Equity Conversion Mortgage or HECM, the most common reverse mortgage is insured by FHA for the purpose of providing a valuable financing alternative for senior homeowners to help them remain in their home and have access to funds by withdrawing a portion of their home equity.

Let’s compare the two.

Conventional/Traditional Mortgage Home Equity Conversion Mortgage (HECM) Reverse Mortgage
Loan Collateral It is a loan using the home as collateral. It is a loan using the home as collateral.
Title/Ownership The title stays in the borrower’s name, they remain the homeowner. The title stays in the borrower’s name, they remain the homeowner.
Interest Rate

 

 

 Interest rate can be impacted by one’s income and credit score.  Limited income and poor credit means a higher interest rate. Income or credit scores don’t affect the interest rate.

 
Qualifying

 

 

 

 

 

 Income and credit history and scores are used to for qualifying; low income or and a poor interest may mean one doesn’t qualify for the conventional mortgage.

 

 

 

 Income and credit history are used to for qualifying; to determine if borrowers meet HUD’s Financial Assessment requirements. If one has a history of late payments on debt and a low residual income a Life Expectancy Set Aside may be necessary.  Under some circumstances they may not qualify.
Closing Costs

 

 

 

 

 

 

 Closing costs include origination fee, appraisal, title and recording fees.

If doing a “Forward” FHA Mortgage Insurance Premiums are charged.  On conventional mortgage one may purchase Mortgage Insurance.

Closing costs are comparable to reverse mortgages…I’ve done side-by-side comparisons. (Contact us for a copy.)

 Closing costs include origination fee, appraisal, title and recording fees.

FHA Mortgage Insurance Premiums are charged.

 

Closing costs are comparable to any conventional mortgage…I’ve done side-by-side comparisons.
Loan Amount Borrowed

 

 

 

 

 

 

 

 

 

 Amount borrowed is based on appraised value of home, credit score and program chosen.

 

 

 

 

 

 

 

 

 Initial amount borrowed is based on the age of the youngest homeowner, appraised value or FHA Lending Limit, expected interest rate and program chosen.

Over time the amount borrowed increases with the interest rate, FHA Mortgage Insurance Premium and draws being added to the loan balance.  At some point it is possible to borrow more than the value of the home at the time the loan was initiated.

If payments are made (they are optional), then they could decrease the loan balance.
Receipt of Funds

 

 

 

 Conventional mortgage funds are drawn as a lump sum.

Home Equity Line of Credit (HELOC) creates a line of credit for a specific term and specific amount.

 Can receive funds as monthly payments, line of credit, lump sum or a combination of these.

Line of credit grows so more funds become available over time.
Use of Funds

 

 

 

 Borrowers purchase a home or refinance to have funds for what they need or want.

 

 

 Borrowers benefit by having access to funds for whatever they need or want.  It can be used for more immediate needs or as a financial planning tool or even to purchase a home.
Monthly Mortgage Payments

 

 

 With a conventional mortgage or HELOC one has to make monthly mortgage payments.  If the mortgage payments aren’t made, usually within 3 to 4 months, the foreclosure process will begin. The advantage is they don’t have monthly mortgage payments to make which takes away the risk of foreclosure from not making a monthly mortgage payment.
Payment Requirements

 

 

 

 

 Payments are required to be made.  One has to refinance to access more funds.

 

 

 

 Payments can be made, it’s a choice of the borrower as to when, how much, how often.  Making payments reduces the loan balance.

With the adjustable rate the funds are applied to the line of credit and can be borrowed without refinancing.
Interest

 

 

 

 

 Interest is paid each month along with the principal.  Reducing the loan balance over the term of the loan.

If one has a balloon payment the full payment would be required at the end of the loan term…generally 10 to 15 years.

 Interest is accrued over the life of the loan.  This increases the loan balance over the term of the loan.

If one chooses to make payments, the loan balance will be decreased by the of payment made.
Borrower’s Responsibilities

 

 

 

 

 

 Borrowers are responsible for keeping insurance on the property, paying property taxes and maintaining the home.  As long as they abide by the terms of the loan they are not forced from their home.

 

If they don’t abide by the terms of the loan, they risk a foreclosure.

 Borrowers are responsible for keeping insurance on the property, paying property taxes and maintaining the home.  As long as they abide by the terms of the loan they are not forced from their home.

If they don’t abide by the terms of the loan, they risk a foreclosure.
Loan Term/Due Date

 

 

 

 

 It is a loan and does need to be repaid over the life of the loan.  A conventional mortgage loan term is generally 15 or 30 years.   A HELOC’s loan term is generally 10 to 15 years.

 

 

 It is a loan and does need to be repaid at the end of the loan term.  The reverse mortgage loan is not due and payable until the home is no longer the primary residence of the borrower or on their 150th birthday.  (Or if they don’t abide by the terms of the loan.)
Equity Difference When Sold

 

 When the loan is being repaid, if the home is sold for more than the loan balance, the borrower or their heirs receive the difference. When the loan is being repaid, if the home is sold for more than the loan balance, the borrower or their heirs receive the difference.
Non-Recourse

 

 

 Conventional loans can be non-recourse; it’s determined by the lender.  Without the non-recourse factor the lender can be repaid from other assets of the borrower. All reverse mortgages are  non-recourse which means there is no personal liability to the borrower or their heirs.  The loan is paid back only from the property.
FHA Mortgage Insurance Premium Covers

 

 

 If the loan balance is higher than what the home can be sold for when the loan is due, the FHA Mortgage Insurance covers the difference to the lender; the borrower or their heirs or tax dollars don’t cover this difference.
Staying in home when all funds used

 

 

 

 Borrowers stay in their homes even when all funds are drawn as long as they abide by the terms of the loan.

 

 

 Once a reverse mortgage is in place, even if one draws all the funds available from the reverse mortgage, the borrowers can stay in their home as long as they abide by the terms of the loan, i.e. pay property taxes and insurance, HOA dues if applicable, and maintain the home.
Protections

 

 

 

 

 

 

 

 

 

 No counseling required.

 

 

 

 

 

 

 

 

 

 Requires counseling by a HUD approved 3rd party counselor as a protection to help borrowers understand the details of the reverse mortgage. The processing cannot start until the counseling has occurred.

HUD regulates what lenders and third-parties may charge stating they must be customary and reasonable costs necessary to close the mortgage. Mark-ups are not allowed.

Disclosures and sample closing documents must be provided to borrowers at application.
Lender/Bank and Investor Benefit

 

 Lender makes money on the interest.

Would you loan money without receiving a benefit?

 Lender makes money on the interest.

Would you loan money without receiving a benefit?

Loan Officer Explaining Reverse MortgageAs with any financial product, or any purchase for that matter, one should get the facts and understand the terms.

The loan officer one is working with should be explaining the features and terms of the reverse mortgage.  Yes, unfortunately there are bad apples in every industry but that doesn’t mean the product is bad.  The reverse mortgage industry has implemented protections to prevent borrowers from scam.

Understanding reverse mortgages one might find the reverse mortgage is a more viable option for their situation.

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.

© 2016-2018 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:  http://wp.me/p4EUZQ-1zP

Related articles:

Blog posts’ information is current as of date post published, program is subject to change 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

Posted on by





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.





Senior Homeowners Benefit from Reverse Mortgages

Posted on by





Senior Homeowners Benefit From Reverse MortgagesAre you looking for some funds to supplement your retirement?  Do you need to modify your home to meet your needs?  Are you looking for a way to pay for the home health care you need now or may need in the future?  Do you have a mortgage and find making the payments is a struggle?  Or maybe you want to continue making your trip south during the winter but funds are short to do so.  Are you considering downsizing to move closer to family or want to have a home more suitable to your current lifestyle?

A Home Equity Conversion Mortgage (HECM)  reverse mortgage may be your answer.  A reverse mortgage is a home equity loan with special terms for senior homeowners 62 and older.  Similar to a conventional loan, you continue to own the home.

With the flexibility of making payments toward the loan balance, or NOT making a mortgage payment at all, the HECM reverse mortgage could provide the cash for your immediate needs or future needs. (Borrowers are still responsible for paying property taxes, hazard insurance and maintenance of the home.)

It also offers more flexibility on how you can receive the funds including monthly payments, line of credit, lump sum or a combination of these versus a lump sum with a conventional mortgage.

An additional benefit is funds left in the line of credit grow so more funds become available over time…a great advantage over a HELOC and a great tool for long-term care planning.

There are no limitations on how you spend the funds.  Look at ways the reverse mortgage benefited some seniors:

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.

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.

Don't Rely on ChildrenNot 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 her 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.

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.  Providing them more freedom and control of their life during retirement.

Line of Credit for future needs:  Janice did the reverse mortgage just for the purpose of having a line of credit to draw on in the future when needs arise.  Because the funds in the line of credit grow more funds become available in the future.  With the line of credit available to her when she needs car repairs, or even a new car, or to cover medical expenses or long term care needs she will have funds in her line of credit to cover these needs.

Purchase a New Home:  Mike and Carol wanted to purchase a new home that fit their needs of a one-level so they used the reverse mortgage rather than a conventional mortgage to finance their new home.  This meant they didn’t have monthly mortgage payments to make and provides them a better cash flow during their retirement years.

The loan becomes due and payable when the home is no longer the primary residence of the borrowers or on their 150th birthday.  Another difference and benefit of the reverse mortgage over a traditional mortgage is that the reverse mortgages are non-recourse loans.  This means there is no personal liability if the loan balance is higher than what the home can be sold, it is paid only from the fair market value of the home.  If the home is sold for more than the loan balance then the borrower(s) or their heirs keep the difference.

As with any mortgage loan there are closing costs.  The closing costs of the reverse mortgage are comparable to a conventional mortgage.  They include the origination fee, appraisal, title and settlement and recording fees.  With the FHA HECM reverse mortgage HUD’s regulations state that only the actual cost may be charged to the borrower, they do not allow mark ups such as processing fees.

As a FHA loan the fees include the FHA Mortgage Insurance Premium – this would be the same if they are doing a Forward FHA loan.  When comparing closing costs side by side to a conventional loan the difference is the up-front FHA Mortgage Insurance Premium.  The benefits of FHA insuring the loan include guaranteed funds, a lower interest and the loan being non-recourse as well as regulating the fees.  “Surprise! Reverse Mortgage Closing Costs Actually Compare to Conventional Mortgage Costs” provides a side-by-side comparison.

When considering whether to do a conventional mortgage, a HELOC or a reverse mortgage you must consider if you can even qualify for a conventional mortgage or HELOC; then if you or your spouse can make the payments over time.  For example, what happens if “life happens,” could you continue making those payments?  Would you be stressed trying to pay living expenses, medical bills, or would you be facing foreclosure? Or could you qualify for the reverse mortgage and have enough funds to pay off your current mortgage?

Will the reverse mortgage be the answer to your financial retirement needs?  Explore the option, get the facts, know what to look for in an originator. You might find it will benefit you as it has benefited hundreds of thousands of other seniors.

Meet Reverse Mortgage Originator in personFor 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.

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.

© 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-1rv

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.





Hearing these statements are reasons to do a reverse mortgage

Posted on by





Have you heard any of these statements from a homeowner 62 and older?  They may find their solution is a reverse mortgage and they should be encouraged to get the facts to see if the FHA insured Home Equity Mortgage (HECM) is right for their situation.

  • “I want to stay in my home.”Reasons to do a reverse mortgage
  • “My only option is to move.”
  • “I’m planning for retirement.”
  • “I’m not sure how I’m going to afford any potential long-term care costs.”
  • “I can’t afford home health care.”
  • “We can’t afford a mortgage payment.”
  • “We can’t afford to make home repairs or modifications.”
  • “I need money but drawing from my retirement plans have penalties.”
  • “Not enough money at the end of the Social Security check.”
  • “I need help with keeping up my home with housekeeping or yard work.”
  • “I’m downsizing and moving.” or “I’m moving closer to my children.”
  • They can’t afford the little extras that would help them maintain and enjoy their life.
  • They want Security, Independence, Dignity, and Control which they are missing in some way now.

There statements fit into the 5 general reasons to do a reverse mortgage:

  1. Needs based: need funds immediately for covering living expenses
  2. Maintaining lifestyle:  having funds for travel, buying a car, purchasing vacation home
  3. Protecting or delaying draws from other investments:  Using the reverse mortgage to tap home equity rather than accessing other investments or retirement funds that may have penalties or are taxable; let the investments or retirement funds grow so more retirement funds are available later in one’s life; use the home equity so other investments can be left as the inheritance
  4. Planning for long-term care needs (Standby reverse mortgage): Taking the reverse mortgage at a younger age then leaving in the line of credit which grows to have funds to draw from in the future when “life happens”
  5. Purchasing a new home:  Whether downsizing, moving closer to family or buying a dream home, the reverse mortgage can be used for financing.

A reverse mortgage is a mortgage with special terms for seniors 62 and older.  Some of the differences from a traditional mortgage include income and credit scores are not considered to qualify for the interest rate and monthly mortgage payments are not required.  Borrowers are responsible for paying property taxes, insurance, maintaining the home and abiding by the terms of the loan.  Borrowers must meet HUD’s financial assessment qualifications to demonstrate ability and willingness to pay property taxes and insurance into the future.

Rather than a 15 or 30 year term, the loan is due and payable when the home is no longer the primary residence of the borrowers or on the 150th birthday of the youngest borrower. In addition, the reverse mortgage is non-recourse, which means if the loan balance is higher than what the home can be sold for there is no personal liability to the borrower or their heirs.  If the home is sold for more than the loan balance, the borrower or their heirs receive the difference.  The most common and only reverse mortgage available in Minnesota is the FHA HUD insured Home Equity Conversion Mortgage or HECM.

Options are available!  When you hear any of the above statements remember a reverse mortgage may be the option that is the most beneficial to their situation.

© 2012-2016 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-1m5

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.





Seniors Find Independence With Reverse Mortgages

Posted on by





Reverse Mortgage Borrower Has IndependenceAs we look to celebrating the independence of our county let’s also look at how our seniors can celebrate their own independence.  Defined as “sufficient income for comfortable self-support; a competence” at dictionary.com, independence is important to seniors.

When we talk with our clients we hear they want to be able to enjoy their retirement and maintain their lifestyle which includes having their independence.  So how can they do this if they are living off their Social Security and if they have retirement investments but they have dropped in value?

Even though as one ages some help may be needed, they can still maintain their independence.  A reverse mortgage can help provide this independence.  After Edna did her reverse mortgage she said, “Now I have my dignity back and my independence.”

Some instances where the reverse mortgage can help one remain independent include having funds for home repairs, going out to lunch with friends, traveling, visiting family across the country, purchasing a new car, paying medical bills or for medications; paying for help with housework, meal preparation, yard work or transportation, whatever they desire.  The HECM for Purchase also helps seniors have independence.  Having funds for the future and retirement and long term care planning is another way the reverse mortgage provides independence.

Or if one needs more help to remain in their home they would have the funds to pay for the assistance from a home care agency to do so. While some additional assistance may be needed seniors can still have a sense of independence if they have the funds to get the additional help and choose the agency they wish.

Seniors have sometimes used their credit cards to fund their lifestyle or pay their bills, others have used a conventional home equity mortgage or a line of credit.  And others look for additional cash by applying for a conventional home equity mortgage but don’t qualify.

The reverse mortgage can benefit here too.  Interest rates on credit cards are high.  Having the reverse mortgage can reduce their dependence on their credit cards.  They usually don’t qualify for a conventional mortgage with today’s lending requirements especially since their only income is Social Security.  Even if they do qualify or currently have a home equity mortgage or line of credit, they have to make payments which can be difficult on a fixed income or when “life happens.”

Another Minnesota reverse mortgage borrower said, “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.”

A reverse mortgage is a mortgage with special terms for senior home owners 62 and older to allow them to remain in their home.  The loan amount is determined by the appraised home value (or FHA lending limit), the age of the borrower, and an Expected Interest Rate.  Let’s review the facts of reverse mortgages:

  • The title stays in the borrower’s name same as with any mortgage.  The borrower owns the home, no one else does.
  • Income and credit scores are not used to determine the interest rate for the HUD insured Home Equity Conversion Mortgage or HECM, the most common reverse mortgage.  Interest rate is determined by the margin and the program chosen.
  • The borrower may be able to stay in their home as long as it’s their primary residence or until their 150th birthday.
  • Lower interest rates than other loans – historically the reverse mortgage interest rates have been lower than conventional loans, lines of credit and credit cards.
  • A borrower won’t lose their home because they can’t make a mortgage payment – they don’t have to make monthly payments.  They are however, as with any loan, responsible for taxes, insurance and maintaining the property and abiding by the terms of the loan agreement.
  • The reverse mortgage funds are generally considered tax-free (although if proceeds are used for certain purposes taxes may apply – consult with a tax advisor).
  • The proceeds are not considered income so Social Security and Medicare are not impacted and one may still be able to receive Medicaid.
  • The HECM is government insured and funds are guaranteed to be available for borrowers if something happens to the lender.
  • Allows access to more funds without paying additional closing costs – there is a growth rate with the line of credit and monthly payment options with the adjustable interest rate program.
  • There are no out of pocket costs other than the cost of the appraisal.
  • There are no prepayment penalties.
  • Borrowers or their heirs get to keep any remaining equity after the loan is paid off.
  • The loan is non-recourse which means there is no personal liability to the borrower or their estate.  The repayment amount is determined by the fair market value at the time the loan becomes due.

Paying off a mortgage on her home, Judy stated, “I truly believe in reverse mortgages, especially for someone like me with a limited income.  I received enough from the reverse mortgage to pay off some other bills and still had a little to put into a “line of credit” account.  Some of the bills I am paying are credit card debts which have a very high interest rate.  It’s a good feeling to be able to do that.  It makes bill paying each month less stressful.”  Now this is senior independence!Happy Independence Day!

Have a wonderful time celebrating the independence we have in this wonderful country of ours.  And keep in mind that a reverse mortgage equals independence for seniors.

© 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-1dq

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.





Tis the season of gratitude…Happy Thanksgiving!

Posted on by





Happy-ThanksgivingIt’s Thanksgiving and the season to reflect and give thanks.  I want to take this opportunity to say I’m grateful for all who are in or have been in my life and have touched it in one way or another.  I’m grateful for the talents God gave me and my parents taught me to use.  And I’m thankful that I have the opportunity to use those talents to assist others and make a difference in their lives.

May you have a Happy and Blessed Thanksgiving!

Beth Paterson, CRMP
Certified Reverse Mortgage Professional

© 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.