Using a Reverse Mortgage to Pay For Home Care

Aging happens.  It's something we cannot avoid.  If you are getting older and are in need of home health care, how are you planning to pay for it?  Unfortunately, Medicare does not pay for home care, you must go to the hospital, but who wants to do that if they don't need to?  If you do not have long term care insurance or a lot of money in the bank you need options!  One option many Utah seniors have is the reverse mortgage.

If you are over 62 and have enough equity in your home, you can borrow a portion of that equity to use for whatever purpose you want, including home health care.  Home care has many benefits, not the least of all being able to stay in your home where you are comfortable and where you want to be.  If you do not require much assistance, or just custodial care where you do not need a licensed professional, you can even pay your children or other family members to help you with your care.  This can be a great option because it allows you to spend quality time with some of your family members, and also gives you the chance to pay them for their help.  For many seniors, a reverse mortgage is all you need to start getting the home help you need.  To see how much you qualify for with a reverse mortgage and to see if it will be worth it for your home care needs, try our reverse mortgage calculator.

If a reverse mortgage alone is not enough, you have other options.  While Medicare does not pay for home care services, Medicaid may.  There is a program called the Cash and Counseling program, that can help cover the costs of home health care, and even pay your children if they are the ones providing the care.  These programs differ in every state so it is important to know you local laws.  Utah is "spend down" state, which looks at your income and if you can not afford the cost of the care, you will qualify for help.  For more info and a list of states you can click here.

Whatever your health care costs are, it is nice to know you have options available to you.

Your Grandkids Are Coming! Better Be Ready.

I want to take a break from the reverse mortgage stuff and talk about something else that most Utah seniors have to think about...THE GRANDKIDS!  Having your grandkids over to visit can be a rewarding and fun experience, but it can also be dangerous!  Here are 15 easy tips on how to grandchildren proof your home.

1.  Pick up or move small items or breakables off lower shelves and tables
2. Secure any outside doors, especially if they lead to a street or pool
3. Put all poisonous liquids on a high self or behind a locked door
4. Install baby locks on any draws or doors you don't want opened
5. Set your water heater below 120 degrees
6. Put safety gates on stairways or hallways you don't want them to enter
7. Get a baby monitor
8. Keep all hot liquids out of reach and keep pot handles turned inward when on the stove
9. Invest in a high chair or booster seat
10. Buy a pack n play for nap and bedtime
11. If you have a crib, make sure it meets the latest child safety standards
12. Have some children's books on hand
13. Keep a box of some toys to play will (make sure they are age appropriate for little ones)
14. Take lots of pictures
15. Don't be afraid to have fun and remember most messes can be cleaned up!

A couple of other things to remember are to be well rested before the grandchildren come over; it is easy to forget just how busy they can be and how much more energy they have than you do!  Also if you are physically able, get down and play with them.  Your grandkids will remember the times they got to wrestle, or play cars or dolls with their grandparents.

Refinancing a Reverse Mortgage??

There is a misconception out there that once you get a reverse mortgage you are done; no more watching what the rates do or if closing costs go down.  Once you have a reverse mortgage you can get up to refill your water glass when the mortgage commercials come on while you're watching TV because this now doesn't apply to you.  Many people think that the reverse mortgage is the last loan they will ever get.  While this is true for many reverse mortgage borrowers, the fact is: You can refinance a reverse mortgage! 

Refinancing a reverse mortgage is easy and cheaper to do.  There is never a prepayment penalty with a reverse mortgage so if the rates drop or if your house value goes up, you can refinance to better your situation.  The loan is cheaper the 2nd time because of a new regulation implemented by the US Department of Housing and Urban Development.  Instead of paying the full upfront mortgage insurance premium (MIP) on a refinanced reverse mortgage, the new regulation would enable a borrower to be credited for the amount of MIP paid on the first loan.

In many cases the MIP is the most expensive cost associated with a reverse mortgage, so not having to pay that again can really make a refinance cost effective.  Some of the most popular reasons to refinance a reverse mortgage are:

• Interest rates drop
• House value goes up
• Add a spouse that was not on the original loan

The thing to remember is once you have a reverse mortgage, you are not locked into the loan.  You can refinance it at any time onto a new reverse mortgage if the conditions are better or to a conventional mortgage if the reverse was not right for you.  If you currently have a reverse mortgage and are wondering about your refinance options, check out this reverse mortgage calculator to see your options.

Can I Get A Reverse Mortgage If My Home Is In a Trust?

Many forward thinking seniors have created an estate plan for legal and tax purposes.  While this can be a great thing, it can make it harder to get a reverse mortgage or other type of home loan.  One question I get often is can a person get a reverse mortgage on their home if that home in owned by a Trust?  The answer is simple; it depends.  First lets talk about the different kinds of Trusts.

Revocable vs. Irrevocable

When planning your estate, there are two different kinds of Trusts, revocable and irrevocable.  The revocable or "Living Trust" is simply a Trust that can be changed or modified at any time.  These are the most common types of Trusts because who wants to be locked into something permanent if they don't have to?

The Irrevocable Trust is the opposite, once the agreement has been signed, it cannot be changed in any way.  These types of Trusts are not too common while the Trustmaker is alive.  Most revocable Trusts will be changed to irrevocable once the Trustmaker dies.

There are many benefits for having a Trust such as estate tax reduction, asset protection, and charitable estate planning.  If you are looking for ways to protect your estate for your spouse or children, a Trust is a great way to go.

Reverse Mortgages and Trusts

So, can you get a reverse mortgage while your home is being protected in a Trust?  Like I said before, it depends on what type of Trust you have and also the wording of the Trust.  Most revocable Trusts are set up to allow different types of financing on your home, and if they are not, they can be changed to allow a reverse mortgage.  You can also quit claim out of a revocable Trust which is the easiest way to get a reverse mortgage if you have a Trust.

An irrevocable Trust on the other hand is not so easy.  Unless the Trust specifically provides an exception for refinancing the home, then you are out of luck.

Bottom line is having a Trust along with a reverse mortgage can be a great way to plan your estate.  If you have a Trust and are looking into a reverse mortgage; before you apply, check to see what type of Trust you have and how it is worded.  If you are thinking about having a Trust created, you may want to look into the reverse mortgage first and then the Trust because it will speed up the reverse mortgage process and paperwork.

If you have additional questions, visit our reverse mortgage website or call 800-431-9250.

Reverse Mortgage Scams!

Last month the National Counsel On Aging released their list of 8 reverse mortgage myths.  I have expanded on a few of them in some past posts and want to take the opportunity to talk about the final myth mentioned in the article.  Myth #8 is entitled, "Most reverse mortgage borrowers who end up facing foreclosure were scammed."

It is sad that there are people in our world who look to take advantage of others, especially our seniors!  It is also sad that this happens in the reverse mortgage industry, but that's why the 3rd party counseling is so important!  This counseling is unique to the reverse mortgage; it's also mandatory and should cut down on the amount of misrepresentations made by unscrupulous loan officers.  If you are looking to do a reverse mortgage, you should not just go to the top person on the list that your loan officer gives you.  Ask around to others you know who have done a reverse mortgage and find out who they used.  If you don't know anyone, call everyone on the list your loan officer gives you and choose the one you feel most comfortable with, whether it be by phone or in person.  If you do this, it is pretty hard to be scammed by your lender because a good counselor will catch things that are not right.

The only way you can be foreclosed on in a reverse mortgage is if you fail to pay your property taxes and insurance, and if you let your property fall into disrepair.  As long as you don't do those 3 things, it doesn't matter what else happens to your financial situation, you cannot be foreclosed on!  Most reverse mortgage foreclosures tied to a scam happen when the borrower takes out a lump sum and then invests that money into something they don't know much about or have control over and the money gets lost.  If your loan officer tries to sell you or push you into some financial product with your reverse mortgage proceeds, you need to run like Hell!  This unfortunately is where most of the scams tied to reverse mortgages happen.  It is not the loan itself that is causing the problems, it is what you do with the money.
If you want to invest the money you get from the reverse mortgage, that in a lot of cases is a very wise choice...and even if your loan officer recommends a financial advisor they know that doesn't mean its a scam.  What it does mean is you need to do your homework.  Talk to other financial planners about what you should do with your money, get second and even third opinions.  You may even decide to use the adviser your loan officer told you about, that is fine after you have done your own research!  It is also usually not advisable to get a reverse mortgage and use the money to invest with a family member.  This unfortunately is the cause of much fraud involving revere mortgages.  Remember in most cases you are dealing with your larges asset, don't take that lightly!

Here are a few things to remember when doing a reverse mortgage to make sure everything is on the up-and-up!

• Take the reverse mortgage counseling seriously.  Make sure the counselor has a copy of the proposal documents your lender gave you.
• If you are investing the money you received from your reverse mortgage, do your homework.  Use a trusted financial advisor you have used before.  If you lender recommends one, get another opinion.  It's also a good idea to not invest everything.
• If your loan officer says they are licensed to sell financial products and you should use them to invest your money, call your State Division of Real Estate, this in most cases is against the law to be involved in both transactions at once.
• Be cautious using they money to invest with a family member.
• In all cases if you feel like you are being targeted by a scammer, call 1-800-347-3735 to file a complaint with HUD.

Big Reverse Mortgage News!

I want to let you know if you haven't already heard...Reverse Mortgage USA's Utah branch does not charge origination or servicing fees!  If you are considering a reverse mortgage now is a great time to take advantage of record low rates and fees!  Call 800-431-9250 or visit our website to learn more.

This week, look farward to learning about reverse mortgage scams and we answer a pretty popular question..."can I get a reverse mortgage if my house is in a Trust?"

Is a Fixed Rate The Best?

The 6th myth spoken about in the National Council on Aging’s 8 reverse mortgage myths article talks about a fixed rate vs. an adjustable rate reverse mortgage. Now I bet if you surveyed 1000 seniors about whether a fixed rate or adjustable rate is better, you would have an overwhelming response that fixed is best. This is just my opinion, but how could someone who probably owned a home back in the late 1970's through the late 80's say anything different—especially if you just happened to be one of the lucky ones who purchased a home in October of 1981 and had a wonderful mortgage interest rate of 18.45%. In many seniors minds, sure an adjustable rate may be at 3% now, but in a year or two it will be back in the teens and then they will be stuck...this is not the case now with rate caps, but that is what is thought so why chance it, just get a fixed rate!

This line of thinking makes sense to most people, but depending on your situation, this may not make the most sense with a reverse mortgage. The fixed rate reverse mortgage has lots of benefits. Most cases it gets you the most money, the rate is fixed, and it is by far the most popular, so it usually is faster to underwrite and close on the loan. The main drawback with the fixed rate reverse mortgage is that you are required to take a lump sum of all the money you qualify for; you don't get a choice, you have to take the money. Depending on your situation this may be perfect for you, but if you don't need all that money looking into an adjustable rate reverse mortgage might be the way to go.

With the adjustable rate option, you can choose to take the money as a lump sum, a line of credit, or a monthly payment. This may be the best choice if you do not need much money right now and don't trust yourself with it once you have it. I'm in that situation...if I have cash in my wallet it tends to disappear. I can't ever seem to account for where it goes, it just jumps out of my wallet and walks away. If you are like me with cash, and now you don't have a mortgage payment plus you have a large sum of money burning a hole in your pocket, this could be a recipe for disaster. Being set up on a monthly payment option or even a line of credit where you only pay interest on the money you use could save you pain in the long run.

Reverse Mortgages can be a great loan for many Utah seniors, but contrary to popular belief, the fixed rate option may not be the best for everyone! To see how much you qualify for on both the fixed and adjustable rate, check out our reversemortgage calculator or call 1-800-431-9250 to get prequalified over the phone.

Reverse Mortgage Myths

Last month the National Council on Aging released their top 8 myths about reverse mortgages.  Many of the myths are easy to guess, but there are a few of them that I want to spend a couple blog posts discussing.  The first one is myth #4, "Reverse mortgages should only be used as a last resort".

One of the things I hear people say who I know could really use the reverse mortgage but just can't get off the fence is "We're not to that point yet".  What I always ask is, "what point do you mean".  It seems that many people think the reverse mortgage is only something for the destitute, or those without another choice available to fix some sort of personal financial meltdown.  This however is not the case!  I have done many reverse mortgage loans for people with paid off homes and large monthly incomes who just want to be in control of their biggest asset, not the market!  Besides, to quote the NCOA article; "If you wait until you are in a financial crisis, a little extra income each month probably won’t help. Reverse mortgages are best used as part of  a sound financial plan, not as a crisis management tool."

So take a good look at your situation.  Are you on a fixed income?  Do you or your family have a history of health problems?  Do you have an adjustable rate mortgage?  You may be okay now, but what about when the price of gas goes up another fifty cents or even a dollar a gallon?  What will you do if the interest rate on your mortgage goes up 1/2 a point and your monthly payment increases by $100?  Now is the time to prepare for any what-if's that may be coming in the future.

Along with a reverse mortgage there are many other programs and benefits that you can qualify for to help with day to day needs.  This can be help with anything from property taxes, food and medications, to home energy.  You can visit http://www.benefitscheckup.org/ to find out more.

Tomorrows blog post will discuss another myth mentioned in the NCOA's article.  Stay tunes to see if the fixed rate reverse mortgage is always the best way to go...

Saturday Solicitation 😄

The phone number to call if you have any reverse mortgage questions is 1-800-431-9250. We are happy to help you get educated so you can decide for yourself if a reverse mortgage is right for you!

Of course if you don't feel like calling you can visit our website at www.reverseutah.com!

Three More Reasons Reverse Mortgage Popularity Will Increase

The 231-page reverse mortgage report by the Consumer Financial Protection Bureau (CFPB) brought up some interesting information about the number of seniors who actually have a reverse mortgage and why they may be joined by many more soon.

According to the CFPB's report, the reverse mortgage, more formally known as the Home Equity Conversion Mortgage (HECM), has yet to reach the vast market of eligible senior homeowners. In 2010, only around 3 percent of the 24 million qualified senior homeowners took advantage of the loan program averaging about 70 thousand newly originated reverse mortgages a year. This was down more than 30 thousand from 2009!

Some developments are, however, expected to change the trend.

Firstly, reverse mortgage-qualified baby boomers are growing in numbers. From the estimated 24 million in 2010, it is up to 32 million in 2012. That's a 33 percent increase or additional 8 million qualified senior homeowners in two years.

Secondly, the report released by the Office of the Chief Actuary in May regarding the possibility that the Social Security Administration may not be able to live up to its promised benefits brought some chilling effect. Seniors, financial planners and even organizations into retirement research started looking for ways to prepare for the coming of this anxiety-causing event.

The third development is tied with the second one. After Social Security, home equity is the largest asset of a typical senior in the country. With the hope of addressing the Social Security's pending deficit, a growing number of financial and retirement planners started looking at the reverse mortgage closely and acknowledged its potential to boost retirement preparedness.

With the economy not looking like it will improve anytime soon, now may be the best time to look into a reverse mortgage to help protect your future.  For more information on the reverse mortgage and to see if you qualify, visit our main reverse mortgage website. 

Portions on this post were cited from the article "A Personal Take on the CFPB's Reverse Mortgage Report"