Tag Archives: Reverse Mortgage Benefits

Hearing these statements are reasons to do a reverse mortgage

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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.

Reverse Mortgage Assists to Cover Expenses and Protect Assets

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Reverse Mortgage provides funds for retirementHome owners sometimes find themselves tapping their retirement funds or assets to cover their monthly expenses. And when “life happens” such as medical expenses or other emergencies they find themselves drawing even more money from their accounts. A reverse mortgage is an option to protect their retirement funds yet have the funds for their everyday living, maintaining their lifestyle or emergencies.

Ron, a recent borrower stated, “Initially we did the reverse mortgage to buy hearing aids and for the longer-run to have funds for ‘emergencies’ without having to use investment funds.”

After the passing of his wife, Darrel found he was drawing funds regularly from his retirement funds for his living expenses and other needs. He chose to do the reverse mortgage so he wouldn’t have to keep drawing from those accounts and paying the penalties that came with it. The addition of $300 tenure payment and $15,000 in his line of credit means he can leave the retirement funds to grow.

Dorothy joined me for a presentation to other seniors, sharing why she did the reverse mortgage. “I have lived in my home for many years.  I ‘knew’ Social Security was going to take care of me… my mother had gotten by on it and I figured I would too.

Reverse Mortgage Works Wonders for MN womanI retired at 65.  I had no hospitalization or a pension when I retired.  I didn’t face those facts right away.  I had invested and purchased stocks over the years in modest amounts.  I figured that would be my answer to any and everything.  When I wanted to travel I just cashed in part of a stock and I took off and did some great fun things.

“However we know the stock market took a plunge a couple of times and what I had was back down to half or less than what I had built up.  Also I was having to use this in addition to my Social Security income.  Fortunately I was able to have paid off my mortgage by the time I retired so I didn’t have those payments.  I thought it would be easy street.

“I had a house paid for and was able to get a line of credit from the bank.  Anything I wanted to do I would I just borrow the money on the line of credit.  After that climbed I would cash some stock in to pay the line of credit.

“Pretty soon I needed a car.  I took out a loan on the car. Pretty soon I’m paying the line of credit and the car payment.  And I was using up my stock portfolio.  I was owing more to the bank than I had stock to pay off all this line of credit.  The stock broker I was talking with said, you have your house paid for, the best thing I could do would be to get a reverse mortgage.

“I have my reverse mortgage.  I decided that as long as I was getting my Social Security and didn’t have to touch my stock, I wanted a reverse mortgage line of credit. My reverse mortgage line of credit would grow at nice increments – it was growing faster than my stock portfolio was growing.  I also decided to take a minimal monthly payment.

“The reverse mortgage has given me a great feeling of security.  I don’t have to touch my stock.  My line of credit is going up every month as long as there are funds there.  It’s much better than CDs.

“I’ve done home repairs, replaced my car and taken some funds to get my driveway repaired.  My yard needed some attention that I had overlooked because I didn’t want to spend the money.  So I’ve taken some funds for that too.  I still have a nice sum in my line of credit and I haven’t had to use my stock.

“I watch the market go up and down and it’s not life and death like it had been before when I knew I just had that stock and when it was gone then what would I do.

“It’s worked wonders for me.  I’ve been able to take trips with the money, repair my house, re-roof it, and do this and that.  It’s given me ease of mind and it’s certainly helped my kids because at one point I think they thought they would have to help me financially and they weren’t looking forward to that.  Now that worry is off their mind.  So as long as I can, I will stay in my home, and that’s what I plan to do.”

Nine years after her closing she’s still in her home benefiting from her reverse mortgage.

© 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-1f3

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.

TV Show Discusses Facts & Uses of Reverse Mortgages

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Dr. David Johnson discusses Reverse MortgagesAs host of the show Savvy Senior Sources…Talking With Experts, I and my co-host, Deb Nygaard, talk with Dr. David Johnson, Associate Professor of Finance, to help people understand reverse mortgages and some of the benefits, encouraging people to get the facts from a reverse mortgage specialist before making any decisions.

“To not understand or to be misled and think it’s a bad thing is so sad because so many people could benefit from it.” says Dr. Johnson.

Tune in to watch at:

Part 1:  https://youtu.be/GN84e4YRF6Q
Part 2:  https://www.youtube.com/watch?v=tsdiIbgKutU

© 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.

Seniors Find Independence With Reverse Mortgages

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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.

Food For Thought to Fulfill Key Roles of Social Workers

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

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

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

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

Their services offer:

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

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

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

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

Consider this…

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

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

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

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

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

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

Related Articles:

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

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

Our Experiences with Getting Our Reverse Mortgage

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

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

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

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

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

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

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

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

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

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

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

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

*Some names changed to protect privacy.

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

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

What to expect working with Reverse Mortgage Originators: Our pledge to our borrowers

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Reverse Mortgage Borrower Satisfed with processI’ve heard from borrowers that when they have inquired about reverse mortgages from some lenders they sometimes feel pressured, receiving numerous phone calls, wanting to send them the counseling information and an application before they are ready to make a decision.

I happen to be sitting at the kitchen table with a homeowner informing her about reverse mortgages, providing her with all the details and facts and answering her questions when she received a call from another loan officer. She kindly explained to the caller that she was actually meeting with me face-to-face, a local originator and was not interested in further communication from them, the caller. Before hanging up, even though she had said she was taken care of, the other loan officer said they were still going to call her back. She expressed frustrations that they didn’t listen to her and that she had also received other calls pressuring her before she had heard about me.

As professional reverse mortgage originators we should respect your decisions and not pressure you into making a decision. Those of us who specialize in reverse mortgages and are members of the National Reverse Mortgage Lenders Association (NRMLA) pledge to a Code of Ethics and Professional Responsibility. Pledging to serve you with integrity and keep your best interests as our primary consideration, here is the pledge other NRMLA members and I have made that we will:Borrow with Confidence NRMLA Pledge

  • Know and comply with all State and Federal laws and regulations that protect reverse mortgage borrowers

  • Present you with the full range of reverse mortgage products available from our company.

  • Clearly explain the terms, benefits and costs of each product we present.

  • Inform you of your responsibilities as a reverse mortgage borrower including paying real estate taxes on time, keeping the property properly insured and maintaining the home in sound condition.

  • Work with you and, if you request, with your family and financial advisors either face-to-face or on the telephone as frequently as you choose to educate you, answer any and all questions and help you assess whether a reverse mortgage might be beneficial to you.

  • Explain the benefits of and statutory requirement that you have reverse mortgage counseling.

  • Provide you with a list of HUD-approved independent housing counseling organizations that employ exam qualified counselors to serve you. The choice of the organization is yours and yours alone.

  • Help you prepare for your counseling session to make it most effective by providing you with questions you might ask and information you should be prepared to provide to the counselor.

  • Prepare loan comparison projections and an amortization table for the loan being proposed to review at your counseling session.

  • Not charge any fees prior to the completion of mandatory counseling.

  • Help you analyze your financial ability to meet your responsibilities under the reverse mortgage.

  • Recommend that you seek professional advice if you Reverse Mortgage Originators Pledge to Borrowersare receiving assistance from SSI, Medicaid or other government programs.

  • Recommend you seek professional tax advice when appropriate.

  • Allow you to decide when to close on the reverse mortgage loan and not pressure you to make a decision.

  • Provide you with opportunities during the loan process to change your mind and not take the loan.

  • Pay off the existing liens shown of record, verify taxes are paid, and make sure that you have proper insurance upon closing.

CRMP Certified Reverse Mortgage ProfessionalBeyond the NRMLA pledge, there is a select group of specialists, the Certified Reverse Mortgage Professionals (CRMP), who have taken the extra step and demonstrated their knowledge and competency in reverse mortgages by having a minimum of two years’ experience, personally closing 50 or more loans, earning 12 hours of continuing education courses specific to reverse mortgages and ethics, passed a rigorous exam as well as a background check. Each year CRMPs must complete an additional 12 hours of continuing education to remain certified. CRMPs are dedicated to upholding the industry high standards of ethical and professional practices.

I am proud to say I have earned the CRMP designation. You can find a list of the other CRMPs on the NRMLA website.

Additionally Reverse Mortgages SIDAC has their own Code of Conduct that we adhere to.

As you explore the reverse mortgage option, make sure you are working with a reverse mortgage specialist who has experience with and knowledge about reverse mortgages, not just the title, one who adheres to the NRMLA Pledge to Reverse Mortgage Borrowers and even more specifically one who is a CRMP as well as one you are comfortable and respects you.

© 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-1as

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.

We Were Able To Use A Reverse Mortgage To Purchase Our Beautiful New Home

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HECM for Purchase allows one to buy a new home with a reverse mortgage“Without the help and knowledge of Beth Paterson who first told me about the reverse mortgage to buy I would never have been able to get our beautiful new townhome, which my wife needs because of her mobility to navigate a lot of stairs.”

This was comment I received from Mike after they closed on their HECM for Purchase (H4P) and moved into their new home.

Mike and I had originally talked about 6 years ago when he and Carol were considering a reverse mortgage on the home they had lived for many years.  For various reasons they decided to wait.  We did talk periodically and I kept them informed of product changes.  When Carol was having some issues navigating the stairs they had in their home they decided that it would be better to find a home without all the stairs.  This is when I introduced them to option of using use the reverse mortgage to purchase the new home.

Their search ensued until they found a beautiful townhome not too far from their current home in Minnesota but easier for Carol to navigate now and into the future.  Still interested in the idea of not having a mortgage payment, we met and discussed the H4P so they would have an understanding of the program.  We also met with their real estate agent and the builder to educate them on how this unique option worked.

Like it did for Mike and Carol, the HECM Home Purchase Program provides financing to those who desire to re-size, move closer to children or purchase a new home without having mortgage payments.

The advantages of using a reverse mortgage to purchase a home:

  • There are no monthly mortgage payments required (borrowers are responsible for paying property taxes, insurance and maintain the property).
  • Preserves cash savings and investments rather than liquidating savings and investments to pay all cash for the home purchase.
  • It is a way to leverage funds to make it possible to purchase a higher valued home.
  • Provides financing so one can re-size to a lower maintenance home, one-level home, a home more suitable for aging in place, move to be closer to children or even purchase one’s “dream home.”

Keep in mind, a reverse mortgage is a mortgage but has special terms for those 62 and older.  It offers the most flexibility on how the funds are received and when the loan needs to be repaid.

The steps to do purchase a home with the reverse mortgage are the same as with the regular reverse mortgage.  However there are some unique points for this beneficial home purchase option that one needs to be aware.

Eligibility requirements:

  • All borrowers going on title must be 62 years old or older.
  • The properties that qualify must be residential and include:
    • single family
    • 1 to 4 family dwelling units if the borrower/owner resides in one unit
    • FHA approved condos or manufactured homes that meet HUD’s standards
  • To determine how much is available from the reverse mortgage for the purchase, we run our calculations on the lessor of the final appraised value, sales price, or FHA mortgage limit for a one-family residence (currently $625,500).

For example, if the purchase price is $250,000 and the appraised value is $275,000, we would use the $250,000.  Or if the purchase price is $285,000 and the appraised value is $275,000, we use the $275,000.

  • The proceeds available to the borrower are calculated the same way as with any reverse mortgage, having all the closing costs (origination and FHA MIP, reports, title and escrow/settlement fees) included in the loan so there are no out of pocket expenses other than the appraisal and potentially any inspections.  The “Net Principal Limit” is the amount available to the borrower after costs.

Note: When I’m working with those exploring homes, I run several calculations at various possible home values so when the borrower and their real estate agent are looking for a home, they will have an idea of the home value and the cash the borrower will need at close.

  • The borrower will need to have the difference between the Net Principal Limit and the purchase price available.  For example:

If the purchase price and the appraised value is $275,000 and the Net Principal Limit is $165,000, the borrower will need $110,000* to purchase the $275,000 home.

Rather than using all reverse mortgage funds, more personal funds can be used for the purchase so the reverse mortgage can be set up with a line of credit option. (HECM LIBOR option only; the fixed rate requires you to pull all available funds at close and does not offer the line of credit option.)

 For example, if a borrower has $150,000 in funds they want to use to purchase the same $275,000 home, they could combine their $100,000 with the $165,000 from the reverse mortgage proceeds to purchase the home and then have $40,000 in their reverse mortgage line of credit.

  • The funds the borrowers use must be from cash on hand, cash from the sale, liquidation of assets or Gift funds (must meet HUD’s approved funding sources and source of funds needs to be documented).   

The additional funds cannot come from Builder incentives, Seller financing, Seller contributions or concessions, any person or entity that financially benefits from the transaction or third party that is directly or indirectly reimbursed by any of the parties benefitting in the transaction or Credit Card advances, sweat equity, trade equity, rent credit.  Purchasers cannot use loan discount points, interest rate buy downs, closing cost down payment assistance, gifts or personal property given by the seller or any other party involved in the transaction.  Seller can pay their share of taxes and Home Owner Association fees if applicable.           

  • The borrower may choose any of the options/interest rate options:
    • HECM Adjustable
    • HECM Fixed

For calculation purposes our rates change every week.  The rate cannot be confirmed until the week of closing.  However, on the adjustable rate LIBOR we have a Principal Limit Rate Lock which means we can use the rate at the time of application or closing, whichever is the most favorable to the borrower.  For the process of planning how much will be available to the borrower, I initially use the rate and amount of the program chosen at the time of application.

  • Seller has to be the owner of record for 90 days prior to the date of the sales contract (based on when recorded). (This is to protect against property flipping.)
  • Prior to completing an application HUD requires the Certification of Occupancy.
  • The Original Purchase Contract or Certified Copy of the Purchase Contract is needed for underwriting.
  • Counseling must be completed by a HUD approved HECM counseling agency that has been approved to provide reverse mortgage counseling. Minnesota requires that the counselor be located in Minnesota. We will provide a you a list of HUD approved counselors.
  • The property must be livable at the time of closing. Any required repairs must be completed prior to closing by the seller – no repairs or repair set asides are allowed.
  • Funds are provided at closing, as there is no rescission period.
  • The new property has to be the primary residence and occupancy must happen within 60 days of closing.
  • One’s existing home may be retained as rental property or if purchasing current home prior to the sale of existing home, income verification will be required to document the ability to maintain both properties. (This is prevent the practice of “buy and bail.”)

Using the reverse mortgage to finance the purchase of your new home may be your solution to meeting your goals without having a monthly mortgage payment.**

Like Mike and Carol, if you or someone you know are 62 or older and want to…

Happy HECM for Purchase Reverse Mortgage Borrowers…downsize
…move to a townhome so they don’t have to do the yard work
…move to a one-level home
…move closer to their children
…move to a larger home to have space for when their family comes to visit

The HECM for Purchase program may be your financing option!

*You may also need funds for property taxes, initial hazard insurance premium, home owner association dues, etc.
**Borrowers are still responsible for paying property taxes, hazard insurance, maintaining the home and abiding by the terms of the loan.

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:

– See more at: http://rmsidac.com/beths-reverse-mortgage-blog/#sthash.3C3ljz4F.dpuf

© 2014 Beth Paterson http://rmsidac.com/beths-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:

– See more at: http://rmsidac.com/beths-reverse-mortgage-blog/#sthash.3C3ljz4F.dpuf

© 2014 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-18l

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.

This site or information provided is not from, or approved by, HUD or FHA or any US Government Agency or Department. – See more at: http://rmsidac.com/#sthash.vv8MiYI8.dpuf
This site or information provided is not from, or approved by, HUD or FHA or any US Government Agency or Department. – See more at: http://rmsidac.com/#sthash.7ZcOk1EU.dpuf

© 2014 Beth Paterson http://rmsidac.com/beths-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:

– See more at: http://rmsidac.com/beths-reverse-mortgage-blog/#sthash.3C3ljz4F.dpuf

Using A Reverse Mortgage for Freedom, Life, Liberty and the Pursuit of Happiness

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Using A Reverse Mortgage for Freedom, Life, Liberty and the Pursuit of HappinessAs we celebrate our country’s Independence this 4th of July we think of the freedom’s we have in addition to having the rights to life, liberty and the pursuit of happiness.  Personally we may look at having the freedom to make choices and not rely on others as well being able to pursue the things that make us happy to live life with independence.

Freedom to seniors may mean choosing to remain in their home, not rely on their children or the government financially.  Happiness likely means having the finances to enjoy retirement, maintain their lifestyle, go out to lunch with friends, to take their children or grandchildren out to eat or for a fun activity, maybe to the zoo or a play, or to be able to travel for family reunions or weddings.

Use a reverse mortgage to feel more free, have choices, or pursue a better retirement lifeI’m guessing you know someone 62 and older who would be like to be able to feel more free, have choices, or want to pursue their retirement life with the following.  I’m also guessing they would feel happier being able to pursue any the things on this list during their retirement.

  • Stay in their 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 mortgage payments.
  • Have improved cash flow with no monthly mortgage payments.
  • Protect some of their other retirement funds or investments where there might be taxes or penalties on withdrawals.
  • Purchase a new home to downsize and/or  move closer to family
  • Have funds for emergencies.
  • Have funds for making home improvements or home modifications.
  • Retire and not feeling like they have to work just to have money to pay the bills.
  • Save their home when faced with foreclosure or tax forfeiture.
  • Have cash flow to be able to pay taxes.
  • Have funds to pay for home health 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.
  • Have funds for the little extras in life, like:American Flag represents freedom and independence; a reverse mortgage provides financing for freedom and independence in retirement
    • 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 their grandchildren to the zoo or a movie,
  • Being able to do hobbies.
  • Purchase a more dependable car
  • Afford transportation when they can no longer drive.
  • Afford the travel for the family wedding or reunion.
  • Take the vacation they have dreamed of all their life.
  • Reduce financial stress.
  • Have funds to fulfill needs and goals.
  • To live with security, independence, dignity and control.

The equity in your home can provide security, independence, dignity and control through a reverse mortgageA reverse mortgage, a loan with special terms for homeowners 62 and older, may be the financial tool to provide the freedom, life, liberty and pursuit of happiness.

Offering many advantages for senior homeowners, a Home Equity Conversion Mortgage (HECM), the most common reverse mortgage, and only reverse mortgage currently available in Minnesota, has no monthly mortgage payments (borrowers are still responsible for paying property taxes, hazard insurance, maintaining the property), no income or credit score qualifications for determining the interest rate.*  This unique loan allows access to cash from the equity of the home to use through monthly payments, a line of credit with a growth rate, lump sum or a combination of these and pay it back when the home is no longer the primary residence of borrower(s).  When the home is sold any remaining equity goes to the borrower or their heirs.  With the reverse mortgage, if the loan balance is higher than the home can be sold for there is no personal liability to borrowers or their heirs.

While watching fireworks, consider how a reverse mortgage may provide freedom, life, liberty and the pursuit of happiness during retirement years.As you hang your flags, watch parades, gather for picnics, and watch fireworks celebrating the independence of the US, and the freedom, life, liberty and pursuit of happiness we have, ponder and discuss what this means to you and your senior loved ones.  Consider how a reverse mortgage may provide freedom, life, liberty and the pursuit of happiness during retirement years.

Happy Independence Day!

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

© 2014-2015 Beth Paterson http://rmsidac.com/beths-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-17Y

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.

© 2014 Beth Paterson http://rmsidac.com/beths-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://rmsidac.com/?p=4308

Related articles:

– See more at: http://rmsidac.com/beths-reverse-mortgage-blog/#sthash.X7efyTdj.dpuf

© 2014 Beth Paterson http://rmsidac.com/beths-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://rmsidac.com/?p=4308

Related articles:

– See more at: http://rmsidac.com/reverse-mortgages-offer-new-products-for-better-options-for-borrowers/#sthash.4OxwRx6J.dpuf

© 2014 Beth Paterson http://rmsidac.com/beths-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://rmsidac.com/?p=4308

Related articles:

– See more at: http://rmsidac.com/beths-reverse-mortgage-blog/#sthash.X7efyTdj.dpuf

Memories Created for Reverse Mortgage Heirs

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Reverse Mortgage Created Memories for Bob and His FamilyOn a Friday I received a call from the niece of one of my Minnesota reverse mortgage clients telling me that Bob had passed away.  After extending my sympathies I answered her questions and helped her understand the process now that the loan is due.   As I talked with Bob’s niece she shared how loving Bob was and how the FHA  Home Equity Conversion Mortgage (HECM) reverse mortgage not only benefited him but also allowed for him to create numerous memories for the family.

During our conversation I shared some memories of my meetings and conversations with Bob and his perspective on how the reverse mortgage had made a difference in his life.  Bob had called me after his trip to Yellowstone with a nephew telling me what a wonderful time he had had and how happy he was to be able to take the trip.  During another conversation he had said he had remodeled his home to be adapted to be wheelchair accessible.  He had also shared how much the reverse mortgage had given him his independence and the ability to remain in his home where he wanted to be with his dog.  I originally shared Bob’s stories in my blog “Reverse Mortgage Helps Minnesota Senior To Be Prepared for Future.”

Apparently Bob’s wife who had proceeded him in death limited Bob from fulfilling his dreams.  It appeared it had to do with not having much money but also her attitude.  With the reverse mortgage he had money like he never had before.  He would tell his niece, “I don’t know how it is that I have money now when I never did before.”  She said he became energetic and interested in life.

The family’s perspective of the  trip to Yellowstone was that it had not only been a wonderful experience for Bob, his young traveling partner had an experience of a lifetime with his uncle and has memories of the trip to treasure.  I was told the expressions on their faces upon their return were smug and they were keeping secrets that will likely never be shared like “little boys” do.

Bob bought gifts for family members like a vacuum cleaner for someone who needed it but didn’t have the funds to purchase it on their own.  What a good feeling it must have been for Bob to be able to help his family.

Reverse Mortgage created memories for familyHe bought tickets to take family members to movies and plays.  I was told that one of those experiences was taking his niece’s family to the play “Sleeping Beauty.”  As they were sitting in their seats the niece looked over and saw the pleasure in Bob’s face as he was watching the expressions on the faces of his family.  What a memory to treasure!  This was only one of several of these types of adventures and memories for Bob and his family.  The pleasure for the family was the kids got to know an uncle and share time with him as they had not been able to previously.

Having less funds available when the loan is due and payable or less of an inheritance is a negative of the reverse mortgage.  But using the funds and creating the memories by spending time together or giving the gifts and seeing the difference it makes while one is still alive can be a treasure which can never be replaced.

As his niece shared the stories I got tears in my eyes. The reverse mortgage had not only changed Bob’s life but the lives of an entire family.  Just before we were hanging up, Bob’s niece said, “Thanks for loving my uncle too.”

Providing security, independence, dignity and control for our seniors is why I believe in reverse mortgages and am in this industry.  It’s a blessing for me to be able to help seniors and their families.  And I do love my clients and hearing their stories.

For the details and facts on reverse mortgages visit our website, www.RMSIDAC.com.

First posted in 2011, re-posting 2014
© 2011-2015 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-Zf

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.