Tag Archives: Care Management

Where The Heart Is: Using Technology To Remain At Home

Posted on by

I was privileged to present a webinar for GrandCare Systems webinar series:

Where The Heart Is: Using Technology To Remain At Home

You have the opportunity to listen and view the webinar.

Seniors have always wanted to remain at home. Now with the housing market where it is, seniors are staying at home even longer. We’ll discuss how using technology adds benefits to remaining at home.

In this webinar you will learn:

  • How housing conditions are impacting seniors remaining in their homes longer.
  • The benefits of using technology to remain at home.
  • How using technology and a reverse mortgage can be cost effective and expand the time one can remain at home vs moving to senior housing.

Access the webinar here:  http://grandcare.wordpress.com/2011/12/07/1215-webinar-where-the-heart-is-using-technology-to-remain-at-home-with/

© 2011 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-wH

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.

Giving Thanks Because of Our Reverse Mortgage Customers

Posted on by

Giving Thanks Because of Our Reverse Mortgage Borrowers (c) 2008 Beth PatersonMy reverse mortgage borrowers often call to say “Thank you!” for helping them obtain their reverse mortgage.  They proceed to tell me what a difference it has made in their lives as well as for their families.  I always appreciate hearing from them as well as hearing their stories.

I also receive comments and notes of appreciation from others who work with seniors, my referral sources, the vendors who we need to do a reverse mortgage and operate our business, and those in my networks.

For me it goes beyond receiving the thank you’s from others.  I too have to say “Thank you!”  Thank you to my reverse mortgage borrowers and all I work with for the opportunity I have to serve.  I am rewarded to be able to assist in making a difference in the lives of seniors.  I  recognize that it is because of you I have this opportunity to serve and I feel blessed to be able to do so.

Many years ago I found the following poem on a restaurant place mat.  I don’t know who wrote it but I did copy it down and have it hanging on my office wall… a wonderful reminder.

Because the Customer

Because the customer has a need,
we have a job to do.

Because the customer has a choice,
we must be the better choice.

Because the customer has sensibilities,
we must be considerate.

Because the customer has urgency,
we must be quick.

Because the customer is unique,
we must be flexible

Because the customer has high expectations,
we must excel.

Because the customer has influence,
we have the hope of more customers.

Because of the customer,
we exist!

Thank you to my reverse mortgage borrowers, my referral sources, my vendors, my networks and all who help make a difference in the lives of seniors.  It is because of YOU I exist and am so rewarded.

May you find reasons to give thanks for the blessings in your lives this Thanksgiving day and every day.

© 2011 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-wo

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.

Evaluating HECM Reverse Mortgage Payment Plan Options

Posted on by

Reverse Mortgage Payment OptionsA Home Equity Conversion Mortgage or HECM, also known as a reverse mortgage, is a mortgage which allows seniors 62 and over to convert the equity of there home into cash.  Unlike a conventional mortgage, with the HUD insured HECM there are no monthly mortgage payments required.  Instead the borrowers have options on how they want to receive the cash “paid” to them: a lump sum, monthly payments, a line of credit, or a combination of these.  It shouldn’t be looked at as “one size fits all.”  One needs to evaluate the different options to decide which is best for their situation.  Let’s review them here.

A Lump Sum – A lump sum is pulling an amount of funds at the time of closing.  A lump sum can be done with both the adjustable rate program and the fixed rate program.  The adjustable rate program offers more flexibility because one can choose the amount they want at the time of closing with the remainder received in monthly payments or a line of credit.  The fixed rate program requires borrowers pull out all of the funds in a lump sum at the time of closing.

Considerations that need to be taken into account with the lump sum:

  • Pulling all funds at closing is ideal if one has a use for all the funds.  For example used to pay off a current mortgage or other debt or to purchase a new home without the requirement of monthly mortgage payments.
  • If one doesn’t have a use for all the funds, what will be done with funds not used?  A savings account and CDs are not paying much interest so that is generally not wise to pull all funds and place in savings accounts or CDs.
  • The interest starts accruing on the loan balance when the funds are drawn so in the case of a lump sum, the interest is added on the amount drawn up front.  If one doesn’t have a use for the funds and they are put in a savings account, the interest accrued will likely be higher than what is earned as interest on funds in a savings account.
  • Pulling all the funds in a lump sum could impact one who is on or going on Medicaid (Medical Assistance in MN) or other public benefits.  Funds from the reverse mortgage are not considered income because it is a loan against the property, so they are not considered an asset for Medicaid qualifications.  However if one pulls funds from the reverse mortgage and place them in their checking account, savings account, a CD or other investments, they could then be considered an asset and impact qualifying for Medicaid and other public benefits.

Minnesota law allows for reverse mortgage borrowers to pull funds and spend them in the month they were received and not impact their Medical Assistance and other public benefits.  Check with your state’s laws to see what is allowed where you live.

  •  For example I had a borrower who was on Medical Assistance (MA), doing the reverse mortgage to be able to remain in her home with home care.  For her convenience the family was having a bathroom installed on the main floor.  At the time of closing they pulled $10,000 for the bathroom installation.  Because it was spent within the month, she remained on MA.  However if they had only spent $5,000 of the lump sum draw, she may have lost her MA benefit because the additional $5,000 would have put her over the allowable $3,000 in assets.  (Check with an elder law attorney to see what is allowable in your state.)

With their fixed income Paul and Mary were struggling making their mortgage payments on their conventional mortgage.  They did a fixed rate payment plan HECM using all the funds available from the reverse mortgage to pay off their conventional mortgage.  Without having monthly mortgage payments their cash flow improved:  the $1,200 monthly mortgage payment they had been making on their conventional mortgage was now available to meet their other needs.

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

I emphasize that choosing to pull the funds out in a lump sum should only be done if you have a use for all or the majority of the funds at the time of the draw.

Monthly Payment Option – The amount of money one could receive as a monthly payment.  The borrower can receive tenure (for “life”/as long as the home is your primary residence) payments or determine the amount they wish to receive each month.  For example, a term payment can be received for a certain period of time, i.e. 10 years.  Or a fixed amount each month, i.e. $100 each month or $800 each month.  This option is only available with the adjustable rate program.

Considerations for receiving monthly payments:

  • It’s a great option to add extra cash each month in an amount that fits one’s needs if they need a regular amount each month.
  • Offers control so one pulls out what one needs each month.
  • The loan balance won’t grow as quickly as with a full lump sum draw.  Interest only accrues on the amount pulled at which time it becomes part of the loan balance.
  • If one has not accessed all the funds via monthly payments  they are not part of the loan balance to be repaid.
  • One can receive Medicaid and other public benefits while receiving funds in monthly increments.
  • If one is not spending the funds each month and one is leaving them or a portion of them in their checking account, their checking account balance could accumulate so that they have an asset more than what is allowable for Medicaid or other public benefits.

Margaret was receiving home care and needed additional funds to cover the private pay charges.  A reverse mortgage was set up for the amount she needed each month.

With his reverse mortgage, Gene chose the monthly payment option to meet his need of an additional $200 a month to supplement his Social Security payments.

Reverse Mortgage Line Of Credit OptionA line of credit – A credit amount from which the borrower can receive funds at any time and in any amount of their choosing.  With the reverse mortgage the amount of the line of credit cannot exceed the Principal Limit.  This option is only available with the adjustable rate program.

Considerations  for the line of credit payment option:

  • One chooses when they want to draw funds and in the amount they need or want.
  • Offers flexibility and control over your cash flow.
  • The loan balance won’t grow as quickly as with a full lump sum draw.  The loan balance is increased at the time the borrower accesses funds in the line of credit.
  • If one has not accessed the funds in the line of credit they are not part of the loan balance to be repaid.
  • One can receive Medicaid and other public benefits with the line of credit option – as long as the funds pulled are spent in the month they are received (check with your state).
  •  Money in the line of credit can grow, so more money could be available to the borrower in the future.  Often confused as an interest rate, it is actually a growth rate.  Growth rate means more funds are available for use at a future date.  If one has not accessed the money in the line of credit it is not their money so interest is not earned.

Connie did a reverse mortgage so she would have funds available in a line of credit for emergency needs.

After paying off a conventional mortgage for Bob, he left the balance in a line of credit.  A year later he pulled some funds and took a dream vacation to Yellowstone with his nephew.  He also pulled funds at a later date to modify his home so it would accommodate a wheel chair when the time came.

A combination of payment plans – An option to pull funds as a lump sum at closing, leave some funds in a line of credit and receive monthly payments; pull funds as a lump sum to meed an immediate need then leave the balance in a line or credit or set up as monthly payments; or leave some funds in a line of credit as well as receive monthly payments.  This option is only available with the adjustable rate program.

Considerations for the combination payment plan:

  • Offers flexibility to meet one’s needs.
  • Review considerations for each option outlined above.

When Jerry and Delores did their reverse mortgage a conventional mortgage was paid off, they pulled $3,000 out in a lump sum for some immediate needs, set up a payment plan of $300 a month and left the rest in a line of credit.  This fit their needs to improve their cash flow.

Dorothy needed hearing aides.  She did her reverse mortgage, using a lump sum draw to purchase her hearing aides then leaving the balance in her line of credit for her future needs.

Note that with the adjustable rate program one can change the payment plan during the term of the loan.  For example, after having a mortgage of $50,000 paid off at closing, and initially one pulls $1,000 at the time of close but leaves the balance in the line of credit, after 3 years one can have the payment plan restructured to receive a monthly payment amount.  There is a one-time fee of $20 for the payment plan change.

Three years after Jerry and Delores did their reverse mortgage they no longer needed the monthly payments so they contacted the servicer of their reverse mortgage and stopped the monthly payment, leaving all the funds in the line of credit.

These same payment plan options are available for both the HECM Standard and the HECM Saver.

The reverse mortgage is beneficial to seniors if the right payment plan is chosen.  As outlined, there are advantages and disadvantages for each of the options.  Review these considerations and work with your reverse mortgage expert to help you decide which option is right for your situation.

© 2011 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-vk

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 Reverse Mortgage Is Great. Gives Us Some Elbow Room.” And More Testimonies by Reverse Mortgage Borrowers

Posted on by

"Our Reverse Mortgage Is Great."While some people will say they have heard bad things about reverse mortgages I haven’t been able to get the real definition of “bad” or the reasons behind these statements.  However, actual reverse mortgage borrowers have lots of good things to say about their reverse mortgage.   Let me share some of them here.

“The reverse mortgage has allowed me to be able to breathe again and alleviate $tress” S.R.

“My reverse mortgage gives me financial security due to my fixed income.”

“It was a good experience.  The extra money each month is wonderful.” D.M.

“Since my cash assets have been spent down over twenty years of retirement, it became pertinent that my $750 mortgage payment needed to be ended.  I got this far in life seventy eighty years, without a monthly pension.  Now I have funds to supplement my Social Security Income.” D.W

“It’s great not to have to make mortgage payments.” M.L.

“I did the reverse mortgage to have extra money every month for expenses.  It gives me a little more financial freedom.” J.F..

“After retiring I found that my income was too little for the active life I was used to, with trips to family and a modest vacation each year.  But bills were piling up and I needed a real solution to stay in my home. I have my dignity and security back again.”  E.B.

My reverse mortgage has helped me...“The reverse mortgage allows me to have more means to meet future needs.  Having it has taken some of the fear away that I had for the future” C.G.

“I did the reverse mortgage to pay medical bills, credit cards and other debts.  It has made my life less stressful.” C.J.

“The reverse mortgage has allowed me to stay in my home with comfort to do things with my family.” J.T.

“With joy and delight I have felt hope and even vision anew in knowing that this home belongs to me. It comes with a challenge for me to realize that I am accountable in using these funds to achieve goals otherwise not possible.” B.L.M.

“Affords me the ability to retire and make ends meet.” S.G.

“The Reverse Mortgage helps out a great deal and solves many problems.”  C.C.

“As a senior citizen, I had been having some concerns with my finances.  Being on a limited income made much needed household repairs and property tax payments very difficult to meet.  I was going to have to make a choice soon about whether to continue to live in my house, or move on to an apartment.  The costs of continuing to live in my home were getting beyond my means, but I wasn’t ready to leave the home that I had raised my children in.  I decided t use the equity in my house to make life easier and meet the financial obligations that I had.” S.M.

"Our Reverse Mortgage Allows Us To Travel To Florida Every Year."“We can now continue to travel to Florida every winter.”  L.C.

“A reverse mortgage means I’ll have a place to live even in case of serious illness.”  D.B.

“It helps me keep up with bills I cannot cover with my limited income.  It also allowed me to remodel my home to improve it’s value and be more comfortable.  I greatly appreciate it.”  R.D.

“It is really great not to have to be concerned about where the money will come from for my long term care insurance policy payment and emergency repairs.  It has relieved us of a great deal of stress and makes grocery shopping a lot easier too.”  M.S.

“After six years of non-payment of property taxes, nearly four years of confession of judgement, and the home I had lived in for nearly 69 years within weeks of tax forfeiture, the Reverse Mortgage lender Beth Paterson, I worked with came to the rescue with a Reverse Mortgage.  The property taxes are now current for the first time in a decade, and I have a line of credit of approximately $100,000.”  R.W.J.

“The only way we could comfortably stay in our home of 42 years” S.H.Celebrating having a revese mortgage

“Once we realized that we could only relieve the stress on us by contracting 24-hour nursing care for grandma, a reverse mortgage was the only way to do it.” L.T.

“I didn’t have money to keep up with my living expenses so I did a reverse mortgage.  I paid some bills and my credit cards and have some additional funds for future needs.” J.D.

“The relief I feel from not having to make a mortgage payment each month is so great!  Now that my credit card is paid off, I will only need occasional one-time draws from my Line of Credit. To continue living in my home and travel and pursue some hobbies.” E.B.

Keep these testimonies in mind and share them when you hear reverse mortgages are “bad.”  As you can tell, actual borrowers think they are great!

© 2011-2015 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:  http://wp.me/p4EUZQ-ut

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.

Facts Are Needed About The 101 year-old Woman Who Did A HECM Reverse Mortgage And Was Evicted

Posted on by

Headlines give misinformation about HECM Reverse MortgagesThis last week headlines across the country talked about the eviction of a 101 year-old Detroit woman with a FHA insured HUD Home Equity Conversion Mortgage (HECM) reverse mortgage.  In reading the articles and viewing the TV media pieces I find that facts were missing or misconstrued about this situation and reverse mortgages.  While Ms. Texana Hollis is returning home, her story leaves a lot of misinformation about reverse mortgages and the benefits they provide to the many borrowers.  Let’s take a look at the misconceptions of Ms. Hollis situation.

  • Foreclosure/eviction of Ms. Hollis was not due to reverse mortgage but due to lack of payment of taxes, a requirement of the loan (all mortgages as a matter of fact).
  • Ms. Hollis son and POA facilitated her in getting the reverse mortgage but didn’t follow through on assisting in making sure the terms of the loan were followed, i.e. he or other family members ignored the requirements to pay property taxes, insurance and maintain the home.
  • I’ve seen statements such as “signed the house over to a reverse mortgage.”  A reverse mortgage is a mortgage with special terms for seniors 62 and older. The title remains in the borrower’s name – they are not signing the house over to anyone, they are taking out a mortgage with a lien against the property.  My blog article “Beware Of Reverse Mortgage Misstatements – The Fact Is Reverse Mortgage Lenders Do NOT Own The Home!” addresses this fact.
  • Articles state that the son failed to make payments on the mortgage.  Payments are not required on a reverse mortgage.  One of the special terms of the reverse mortgage is that the borrower can have access to funds without making monthly mortgage payments.  The loan is repaid when the home is no longer the primary residence of the borrower(s).  The amount repaid includes the funds received up-front or through monthly payments or draws on the line of credit along with the closing costs, interest and on-going FHA Mortgage Insurance Premiums (MIP).
  • Ms. Hollis’ reverse mortgage funds were used for home repairs.  It appears from several sources that they were also used by the son for his purchase of a car, donations to a church and other things.  If this is the case, this is financial exploitation, NOT the fault of the reverse mortgage and NOT reverse mortgage fraud as some articles indicated.
  • Statements such as, “Ms. Hollis only learned about the eviction when the police arrived and carried out her belongings” are misleading.  In reality loss mitigation notices were sent by HUD, however it appears that those who were taking responsibility to “assist” Ms. Hollis ignored these notices.  I’ve seen statements that her son who is her POA didn’t tell her about the notices because he “didn’t want to worry her.”  In some reports he has admitted to ignoring and throwing the notices away.  She personally may not have been informed of the eviction because her family intercepted the notices.  Don’t blame HUD or the reverse mortgage for actions of her family.  If her family didn’t respond to notices it is neglect on their part (i.e. the son/POA) – not HUD or the reverse mortgage.

And now let’s look at the facts of the misconceptions of reverse mortgages which have been shared along with this story and other media coverage.

  • The bank does not own the home and the title is not passed to the bank.  The title remains in the name of the borrower(s) as long as the home is the primary residence of the borrower.  If the borrower does not abide by the terms of the loan (pay property taxes, insurance and maintain the home, the home may go into foreclosure just as with a conventional mortgage.)
  • One report stated that a danger of the reverse mortgage is if one spouse passes or goes into senior housing, the other may have to pay back the loan.  In reality as long as one borrower remains in the home, the loan does not become due and payable until they, the second spouse, is no longer in the home as their primary residence.  If a non-borrowing spouse (one that is not on title with the reverse mortgage) is the one remaining in the home, yes, the loan is due and payable because the borrower (the one on title) is no longer in the home as their primary residence – this is the terms of the loan.
  • HUD Home Equity Conversion Mortgages (HECM) are FHA insured.  As with a conventional/forward FHA mortgage, borrowers pay an up-front Mortgage Insurance Premium (MIP) as well as an on-going MIP.  The benefits to FHA insuring the reverse mortgage include:
    • Guaranteeing the funds are available for you.
    • Guaranteeing the lender against default or shortfalls
    • Keeping the interest rates lower, the interest rates have historically been lower compared to other mortgages.
    • Providing a line of credit growth rate (available only with reverse mortgages).
    • Ensuring as a reverse mortgage it is a non-recourse (no personal liability) loan.  If the loan balance is higher than what the home can be sold for at fair market value, FHA will cover the difference because one has paid the MIP.
    • Requiring counseling by a third party HUD trained and approved counselor.
    • The HECMs are highly protected.  See my Blog article “You Need To know Reverse Mortgage Borrowers Are Highly Protected.”
  • “The Government will step in” is another statement I’ve heard.  The government doesn’t “step in,” borrowers are paying the FHA Mortgage Insurance to receive the above listed benefits.
  • And of course we have the all too common statement that reverse mortgages are expensive.  Unfortunately, many do not look at the costs of a conventional mortgage, they just make blanket statements without really doing the comparison as I have done.  I’ve written blog articles to address this misstatement:

I think it’s important to note that with a forward FHA mortgage, the up-front Mortgage Insurance Premium is 2.25% vs the 2% on the FHA reverse mortgage. So the forward FHA mortgage is more expensive than a reverse mortgage.

Ms. Hollis story has a happy ending, she is being allowed to return to her home of 50+ years according to HUD spoke’s person Brian Sullivan.  Unfortunately the story still led to a lot of misinformation and misunderstanding about reverse mortgages giving them a bad name.  It would be nice if the media would provide corrections and facts about these valuable and beneficial options for seniors.

Update September 24, 2011:  Facts are still needed!  The revere mortgage took a hit in the media with misinformation about this viable option for seniors yet we still don’t know if this was a reverse mortgage or a conventional/2nd mortgage that was on Ms. Hollis’ home.  However it appears it was NOT a Reverse Mortgage but a 2nd mortgage on the home… or maybe for non-payment of taxes.  Earlier in the week another article reported:

“Action News also found out the background on what really happened and why Texana and her son Warren Hollis were evicted from their home.

“At first, it was thought that Texana’s son had signed a reverse mortgage on the house or that maybe it was a back-taxes issue.

“It turns out that Warren took out a second mortgage on the home in return for $32,000. He claims the money was spent on repairs for the house. He also admits to buying a car with the money and donating some of the money to his church.

“He says the remaining $5,000 was used to pay a number of other expenses. Warren Hollis defaulted on the second mortgage and never told his mother what was going on or that he was receiving eviction notices and warnings. The news broke her heart and she had no time to prepare for being evicted.

“The house no longer belonged to Texana Hollis or her son Warren – who had been living with her. It belonged to HUD. The agency had asked for a court order to have the occupants removed from the home.

“One of the judges from the 36th District Court granted that order several weeks ago and the order was carried out on Monday.

And in another story it was reported that it was brought on by HUD due to many years of non-payment of taxes.

I wonder if we will ever know all the details and what type of mortgage it was or if it was for non-payment of taxes… 

© 2011 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-u4

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.

Questions About Reverse Mortgages Continue Receiving Misinformation As Responses

Posted on by

Couple Want A Reverse MortgageRecently I saw a question on an on-line forum wondering if the questionnaire’s relative should be doing a reverse mortgage.  They stated that the relative who is in their mid-60’s and in great health recently remarried a woman who likes expensive things.  This relative evidently has a monthly fixed income of $8,000 and an expensive home and wants to do a reverse mortgage.  With concern over the new wife “bleeding him dry” they “want to protect him.”  They asked for others experience and opinions on reverse mortgages.

Now before you go off and start stating this person shouldn’t be doing the reverse mortgage because reverse mortgages are bad and/or expensive or the person should be able to live off of $8,000 a month as replies to the questions stated, read my reply:

There is a lot of misinformation about reverse mortgages.  Most articles in the media, politicians, so called “financial advisors” who write and/or comment about reverse mortgages and those mortgage professionals who don’t offer them, friends or neighbors with the statements that they are “bad” are based on their own opinions, not on the facts.  They have not talked with those of us in the reverse mortgage industry to get the facts.  So don’t base your opinion or decision on these sources.

You don’t go to a plumber if you are having health problems, right?  You go to a doctor, and not just a generalist but a specialist in the area of need.  Well the same should be true with a reverse mortgage – go to a reverse mortgage specialist to get the facts to make your decision.

See my blog post, “Seventeen Facts about Reverse Mortgages That You May Not Know.”

A reverse mortgage is a mortgage with special terms for seniors 62 and older.  Some of the differences include income and credit scores are not considered to qualify and monthly mortgage payments are not required.  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.

Often thought of or stated as expensive, the costs are actually comparable to a conventional mortgage except for the FHA Mortgage Insurance Premium.  See a side-by-side comparison at “Comparing Reverse Mortgage Closing Costs To A Conventional Mortgage – You’ll Be Surprised They Are Not That Different.”  And because the interest rates are historically lower than conventional mortgages, in the big picture the reverse mortgage can be less expensive.

Generally seniors don’t qualify for a conventional mortgage.  And even if they do, one needs to consider that payments are required.  What happens if “life happens” and one can no longer make the payment?  They could be facing foreclosure.  I often get calls from those who took out a conventional mortgage and can no longer make the payments and now want to do a reverse mortgage.  Unfortunately, I often have to say that there are not enough funds from the reverse mortgage to pay off their current mortgage (a requirement of the reverse mortgage).  They would have been better to do a reverse mortgage in the first place.

Now with that said, just like anything, a reverse mortgage is not right for everyone.  While there are no limitations on how the funds can be used one should consider if they will have funds to cover taxes, insurance, maintaining the home as well as other needs in the future.

It sounds like in this situation there is more concern about the new wife’s spending habits.  Are you or others concerned about the new wife eating away at an inheritance?  Because reverse mortgage proceeds use the equity, there may be less inheritance for heirs – this can be considered a negative of the reverse mortgage.

Have a conversation about the reasons for a Reverse MortgageI would suggest a conversation with your relative to understand their reasons for a reverse mortgage.  Is the pension and income paying for the everyday lifestyle but they want extra to enjoy life such as traveling or modifying their home to be prepared for the future?  Do they have a financial and estate plan in place?  Do they have long term care insurance to cover needs of their future?  Have they talked with an elder law attorney to set up a will or trust to determine that the inheritance will go to his heirs and not all go to his new wife?

After helping them get the facts and looking at options, keep in mind it is his decision in the end.  You might check out, “Who Are We To Judge How Reverse Mortgage Funds Should Be Used?

Find a reverse mortgage originator who specializes in reverse mortgages (not conventional mortgages) who has experience and will provide you with the facts and details.  Look for one who has the client’s best interest in mind, not just their own.  Work with one who is local – not doing applications through the mail (for example I originate in Minnesota and meet with borrower’s and their relatives in person.).  And see if your relative will allow you to be part of the meetings with the originator and the counseling.  “What to Consider When Talking With Reverse Mortgage Lenders” will help you know questions to ask reverse mortgage originators and determine who you should have assist you with a reverse mortgage.

To get facts and details on reverse mortgages, explore my website, http://www.RMSIDAC.com and other articles on my blog, http://www.BethsReverseMortgageBlog.wordpress.com.

© 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-tL

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.

What Gives You A Sense of Independence? A Reverse Mortgage May Provide You These Freedoms!

Posted on by

Celebrating Our Independence - Finding Independence With A Reverse MortgageWhat gives you a sense of independence?  When I think of independence I think of having freedom of choices and not relying on others.  We all want our independence including seniors.  How can seniors  maintain that independence, have freedom of choices and not rely on others, the government or their children?  A reverse mortgage provides independence for home owners 62 and older.

Having one’s own 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 is desired can give that feeling of independence.  Being able to pay off a mortgage to improve cash flow to to save one’s home from foreclosure gives one relief and freedoms.

While some assistance may be needed for seniors to remain in their home, not relying on children or the government for help and being able to choose a home care agency of their choice will give them the sense of independence.  Using the equity in one’s one with a reverse mortgage can provide seniors the funds for their independence.

“Now I have my dignity back and my independence” was what Edna exclaimed after her reverse mortgage was closed.

Another Minnesota reverse mortgage borrower, Bea, 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.”  The reverse mortgage allowed Bea to pay off a mortgage, then to travel to family weddings and reunions.  Several years after she initially did her reverse mortgage more recently Bea is using her reverse mortgage funds to pay for home care that is needed to keep her independent and at home.

Ted, age 91 and Anna age 87, Minnesota homeowners, were proud and 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  Anna and her daughter were sitting at the kitchen table and Anna 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, Anna 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 initially 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.

A reverse mortgage insured by FHA, an agency within HUD,  is known as a Home Equity Conversion Mortgage or HECM.  As one of the most protected financial options available for seniors, it allows them to use the equity in their home without looking at income or credit scores to qualify.  With no monthly mortgage payments, cash flow can be improved by receiving money in monthly payments, a line of credit, lump sum or a combination of these.

The title remains in the borrower’s name and the loan is not due until the home is no longer the primary residence, when they die, sell or move or on their 150th birthday. Repaid from the sale of the property, as a non-recourse loan if the loan balance is higher than what the home can be sold the borrower or their heirs are not responsible for the difference.  If the home is sold for more than the amount due then the borrower or their heirs keep the difference. 

As you bring out the red, white and blue, hang your flags and MN Reverse Mortgage Borrower Has Independencegather with family to celebrate the independence of this great country of ours, ask what independence means to your loved ones.  What is needed to help them remain independent and in their home, not relying on the government or on you, their children.   Then explore a reverse mortgage, get the facts about them, and see if it might be an option for their situation to maintain their independence.  Happy Independence Day!

© 2011-2015 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-sD

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 Are Expensive… Compared To What?

Posted on by

Reverse Mortgages Expensive - Compared to what?Everywhere you turn you hear or see in print that reverse mortgages are expensive.  I wonder what they are comparing them to to come up with this statement.

A conventional mortgage where one has to qualify for the loan based on income, credit, assets and ability to make the payment?  Where the interest rate is based on one’s income, credit, and assets?  Where one has to make monthly payments?  Where the loan has to be repaid in full either from the sale of the property or from assets?  Selling and moving?  Where there are fees for a realtor, closing fees, moving costs and rent?  Do they really think these options are less expensive?

Have you compared the reverse mortgage to a conventional mortgage?  Let’s take a look:

Terms Conventional Mortgage Reverse Mortgage
Retain Title/Own Home Yes Yes
Use Home For Collateral Yes Yes
Lien Placed Against Property Yes Yes
Income Requirements Yes* No
Credit Score Requirements Yes* No
Monthly Payment Requirements Yes* No
Repayment Term 15 years, 30 years, etc* When home is no longer primary residence or 150th birthday of borrower
Closing Costs Origination fee, third party fees, possibly FHA Mortgage Insurance Origination fee, third party fees, FHA Mortgage Insurance Premium**
Amount To Be Repaid Loan Balance Loan Balance
Non-recourse, there is no personal liability to the borrower(s) or their estate Not an option – full loan balance is due and would be paid from the estate if not from the sale from the home Yes, the estate would NOT have to come up with the difference if the loan balance is higher than what the home can be sold for (fair market valued)

*Terms and interest rate is determined by income, assets, credit score, ability to make payments and points.

** When costs are compared side-by-side the difference is the FHA Mortgage Insurance Premium.  And the FHA MIP provides many benefits to senior homeowners who do a reverse mortgage.

Compared to Selling and Moving?  Let’s take a look.

Terms Selling & Moving/Rent In Senior Housing Reverse Mortgage
Retain Title/Own Home No Yes
Credit Score Requirements Yes (rental properties look at credit and income to determine if you’ll be able to pay the rent or need to rely on government programs) No
Monthly Payments Requirements Yes, Rent.  Rent in Assisted Living will range from $2,500 to $8,000/month depending on services.  Additional services, i.e. home care, will be additional. No
Realtor/Originator Fee 4% to7% Realtor Fee.  On a $200,000 home = $8,000 to $14,000. Origination Fee is 2% on the 1st $200,000; 1% thereafter max of $6,000.  On a $200,000 home = $4,000.
Third Party Fees/Other Fees Yes Yes; FHA Mortgage Insurance Premium
Non-recourse, there are is no personal liability to the borrower(s) or their estate Not applicable Yes, the estate would NOT have to come up with the difference if the loan balance is higher than what the home can be sold for (at fair market value)


Where else can one access funds with these benefits for the cost of the FHA Mortgage Insurance Premium?  To say the reverse mortgage costs are high compared to a conventional mortgage or to selling and moving is like comparing apples to oranges. 

So I still ask, reverse mortgages are expensive?  Compared to what?

© 2011 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material my 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-sm


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 Should Be A Last Resort… To What?

Posted on by

A Reverse Mortgage Should Not Be A Last ResortSo called senior advocates often state a reverse mortgage should be a last resort.  My question is to what?

A Home Equity Loan?  To qualify for a home equity loan or a traditional loan a lender looks at a borrowers’ credit, income, assets, and ability to make payments.  Most seniors don’t qualify for a home equity loan.

Even if a senior does qualify now, if “life happens” and they have to juggle making a mortgage payment or having funds for other expenses, their stress level increases.  And if they don’t make their mortgage payments they could be facing foreclosure.

I receive calls on a regular basis from seniors who did a home equity loan or traditional loan just a few years ago and now they can’t afford the payments.  When I run the calculations more times than not I find there are not enough proceeds from the reverse mortgage to pay off their current mortgage, a requirement of the reverse mortgage, mainly due to lower home values.  But could also be due to the reverse mortgage qualifying factors:

  • the amount one qualifies for with a reverse mortgage is determined by the age of the youngest borrower (the older one is the more one will receive)
  • the home value (determined by a FHA appraisal)
  • the Expected Interest Rate of the program chosen (the higher the interest rate above the 5% FHA floor, the less funds are available)

A combination of these factors could mean there are not enough funds to pay off a current mortgage at a later date.  For example, even though one is older in three or four years, the interest rate could be higher and the home value lower meaning less funds available.

The reverse mortgage as a “last resort” to a home equity loan or traditional mortgage is not generally a wise decision – one could have larger issues in the future.

A last resort to selling and moving?  The time it takes to sell the lower home values, the real estate costs and moving costs can be prohibitive for selling and moving to be a better option to a reverse mortgage.  In addition most seniors want to stay in their home.  See comparisons of costs in my article, “I Want To Stay in My Home – Don’t Tell Me To Sell!” and “Be Educated About Your Options Of Care And Financing The Care.”

A Loan from a family member or friend?  Or help from a family member?  Is there someone who can and is willing to help financially?  What happens if “life happens” to them, i.e they lose their job or have health problems?  This could negatively impact finances for everyone, cause stress for everyone and impact relationships.  Again, generally not a better option to a reverse mortgage.

Skimping on necessities?  “Getting by” without a reverse mortgage?  Doing without to preserve equity for what may be future needs or to leave an inheritance for heirs?  Living from Social Security check to Social Security check just to get by and maybe doing without some of the things in life that give us dignity such as having lunch with friends, getting one’s hair done, or having cable TV… is this really a good option over a reverse mortgage?  Why should one be warned off a reverse mortgage rather than living life comfortably?  Or as Ed, a reverse mortgage borrower stated, “the reverse mortgage gives us some elbow room.”

Not having debt but waiting, saving the equity?  Why attempt to preserve equity from one’s home for the future or as an inheritance for heirs?  For what?  Why shouldn’t one enjoy the extra luxuries in life such as buying a car, taking a dream vacation having funds to attend a family reunion or wedding?  A reverse mortgage could help one remain independent, protect other assets, have security knowing one has funds for what one needs or wants as well as have control and choices of one’s lifestyle.Reverse Mortgage is a finance option

As a senior advocate myself, I help seniors review all their options and educate them on the reverse mortgage so they can make an informed decision and the choice of what best fits their needs.

A true senior advocate will stop stating a reverse mortgage should be a last resort and see that in the big picture the reverse mortgage is generally the best solution sooner than later.  At least it should be reviewed as a valid option for seniors.  And then let the senior make their own personal decision.

My question remains, a reverse mortgage should be a last resort to what?  Mary and Larry, who did a reverse mortgage, stated, “A last resort?  When one is retired it is the last resort.  Our reverse mortgage has been wonderful to meet our needs and maintain our lifestyle.”

© 2011 Beth Paterson. Beth’s Reverse Mortgage Blog, 651-762-9648

This material my 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-r6

Related articles and information:

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.

Are You Confused on Whether to Use A Reverse Mortgage Broker, Bank Or Lender?

Posted on by

I’m sure you have heard the terms “Mortgage Broker,” “Bank” and “Lender,” but do you know the difference?  Do you know for which your loan officer or originator works?  Do you know how to check on their background?  I’m writing this article to clear up the confusion so you learn the difference and the advantages of working with a Reverse Mortgage Broker.

A mortgage broker is a  company in the mortgage business who works with various lenders but does not loan the money. Sometimes referred to as an originating lender.

A Bank or Federal Insured Depositary Institution will often have mortgage loan officers who are employed by the bank and offer only the banks mortgage products, giving borrowers limited choices.  A bank may choose to be FHA approved and offer the HUD insured reverse mortgage, the Home Equity Conversion Mortgage, often called a HECM.

A lender is a company who lends money, but is not necessarily a bank.  They too often employ loan officers who only offer their mortgage products (called their retail department) which has limited choices for borrowers.  Lenders may also choose to be FHA licensed and offer the HECM.

Banks and lenders may have a wholesale department where their reverse mortgage products are offered through approved mortgage brokers.  Not all mortgage brokers can offer reverse mortgages.  To offer reverse mortgages the loan officer’s company must be approved by an FHA approved lender.  Lenders will only approve mortgage brokers who meet certain criteria.

Let’s look at why working with a reverse mortgage broker instead of a bank or lender’s retail loan officer has it’s advantages.

  • Mortgage brokers often work with more than one lender which allows the borrowers to have more options available to be in their best interest and work with the lender/servicing company with the best customer service.
  • As of January 1, 2011 all mortgage brokers (reverse or traditional) are required to be licensed both at the Federal and State levels.  This is managed through the National Mortgage Licensing System or NMLS.
  • To meet the Federal Licensing requirements we needed to take 20 hours of education, pass a test (a very challenging one, I might add), pass Federal background checks, have our credit reports checked and be finger printed.
  • Each state has their own licensing requirements.  Minnesota required 20 hours of education and 8 hours continuing education each year.
    • Lending practices and standards, ethics, and Real Estate Settlement Procedures Act (RESPA) regulations were covered  in the education and on the test.
    • The test focused on conventional lending products so those of us who only offer reverse mortgages had additional challenges to pass the tests.
    • FDIC Bank and NCUA Credit Union originators do not have the licensing requirements so they have not received the education, passed the tests or gone through the same background checks.  At some point the bank and credit union originators will be required to be registered .  This will still not be the same as meeting the licensing requirements.
  • Mortgage Brokers who provide you any information about your loan including various loan options and interest rates must be licensed.
  • Mortgage Brokers are required to have their company and individual NMLS numbers on all marketing materials.  In Minnesota the company NMLS number is identified as “MO” or Mortgage Originator.  The individual is identified with their “MLO” or Mortgage Loan Originator number.  If you don’t see these numbers on business cards and  marketing materials including brochures, flyers, blogs, email signatures, presentations, etc. they are either not licensed or out of compliance.
  • You can check out your originator on the NMLS website at http://www.nmlsconsumeraccess.org/  This will provide you with a lot of valuable information on who you are working with to originate your loan including:
    • If they are licensed (if not listed or don’t have a license number, they are not licensed to originate loans)
    • If they are authorized to conduct business.  And which company they are authorized to represent.
    • If they are licensed in your state.  (You want to make sure the person you are talking with and that signs your application is licensed in your state.  Don’t work with a person over the phone that is not licensed in your state.  I have heard stories where borrowers talk with one person on the phone but another one signs the application because the call center person is not licensed in the state.  This is against the law.)
    • The company where they currently work.  (Does it match the information they have given you?)
    • Where they worked in the past.
    • Their company and branch license information.
  • Reverse Mortgage Broker Provides More Personal ServiceBanks and lender’s retail departments often have a phone/call center representative.  Conversations and applications are often done over the phone and through the mail verses reverse mortgage brokers who often take time to meet with borrowers face-to-face in their own homes.  This means one may receive more personal service from a reverse mortgage broker.
  • Large bank institutions often have their eye on the bottom line by departmentalizing activities which forces loan officers to focus on just taking applications and not understanding all aspects of the reverse mortgage including the processing and servicing.  My blog post, “They’ll Say Anything To Get An Application” points out a couple of these situations.

I am proud to be a mortgage broker, MO #173899, to have passed my licensing requirements, MLO #342859, offer options that can be best for my borrowers as well as personal service.  I have pride in having 100% customer satisfaction documented with our customer survey.

© 2011 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-qB

Related articles and information:

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.