Wednesday, September 26, 2012

Should I Downsize My Home?

downsizing your homeAs many seniors get older and the kids move out they are faced with a choice; should I continue living in the home I have lived in and raised my kids in for the past however many years, or move to something smaller?  The 55 and older communities can sound attractive with all the amenities and activities; plus it is nice to not cut your lawn or shovel any snow.  Some people look to a condo or townhouse to move to in their retirement years and others would just as soon buy that big RV bus and travel the country.  Whether you stay where you are or try a new place, there are pros and cons to everything.

The first thing you have to consider are the expenses.  The first expense that people encounter is the cost to sale and move.  Unless you are a great marketer and can sell the home yourself, you will need to hire a Realtor.  Most Realtors are good at what they do, but you have to pay them on average a 6% fee to market and sell your home.  On a $250,000 home this is $15,000 right off the top, not counting the costs to actually move which usually are more than you think.  A smaller home in a retirement community may be have cheaper utility bills every month, but you also have to consider the HOA fees that many of these communities have.  Depending on the amenities, these fees can easily be over $100 a month.

Next you have to consider how your family will feel.  Even though it is not your kids decision with where you will live, they certainly will have some iffy feelings if you sale and move the home they grew up in.  Some kids don't care, but some are very sentimental.  You may even be feeling that way, by leaving the place where you have made so many memories.

The last thing; What in the world are you going to do with all your stuff?  Over the years we can collect a lot of things.  Sure there are probably a lot of things that can be given to your kids, or just thrown away, but for the things you want to hang onto, will your smaller house have room for them?  There are actually 3rd party companies you can pay to help you decide what you should keep and what you should get rid of.  While this can be a great idea because they are not emotionally attached to your items, this is another expense you will have to consider.

Moving into a smaller house during retirement can be a great option.  Less space to have to clean and upkeep, possibly cheaper mortgage and utilities, and maybe some more opportunities for additional activities.  If this option is for you, then now is probably a great time to buy a new home.  Unfortunately it is a bad time to sell a home.  Many seniors are deciding just like the "stay-cation" has become popular instead of the "vacation" it is better to stay at home during retirement.  If you are feeling this way, the reverse mortgage may be a good option for you.  It allows you to stay in your home and not make a mortgage payment.  If you qualify, it may also give you some extra cash to help supplement your retirement.  If you are looking into downsizing your home to save money, before you do so, check into the reverse mortgage program; you may be surprised at how inexpensive it is along with all the other benefits you get by staying in your home!  To see if you qualify, try our reverse mortgage calculator.

Thursday, September 20, 2012

Help Spread The Word

Spread the word about reverse mortgages in utahI started this blog to help get the reverse mortgage message out to seniors 62 and older in Utah and the response has been great so far.  The amount of page views this site has gotten in just 6 weeks has been amazing, but now I need more help to share this message!

I recently read an article talking about the number of seniors who have heard of a reverse mortgage and I was pleasantly surprised to hear the number was 78%.  I thought it would me lower than that, but I guess I shouldn't be all that surprised with all the TV commercials with high profile celebrities pitching this program.  What I found interesting though was that out of the 78% who had heard of the reverse mortgage, only half of them understood what the program what about, or just 39%.  My guess that most of the 39% either have a reverse or have looked into it before.

These numbers are based on a national survey, but if they hold true for Utah, then 61% of those eligible for this program either do not know what it is or have been misinformed.  If you are reading this and know someone who could benefit by having a reverse mortgage, please spread the word! 

To qualify for the reverse mortgage in Utah and the country you must:
  • Be 62 years old or older
  • have around 50% or more equity in your home
  • have a home or home owners association that is FHA approved.
These are all the things you need to qualify...no credit, no income, no assets, and with the reverse mortgage...NO MONTHLY PAYMENT!

You can share this post with your friends on most social networks with the links below and to the side.  You can email a link to this blog  www.reverseutahblog.com or to our main website at www.reverseutah.com, or better yet, just call me toll free at 1-800-431-9250 and I will be happy to explain the program to you.  There is no pressure.  This is simply to get educated on the different options out there to help supplement your retirement.

Tuesday, September 18, 2012

Cost Of Living And Reverse Mortgages

Cost of living and reverse mortgagesMany in Washington think that Social Security and Medicare are the two most important items on the average seniors mind during this presidential election, but a new report from the AARP shows that is not the case.  According to the anxiety index which was determined by surveying 1852 registered senior voters in July, 75% said they were most worried about prices rising faster than their incomes.

That number is staggering, but not surprising.  I just met yesterday with a perspective reverse mortgage customer that has a paid off home and has enough money from social security coming in every month to pay all her bills, but nothing more.  She is considering the reverse mortgage as a hedge against the rising cost of living expenses, and from the sound of the survey, she is not the only one nervous about this. 

So how can the reverse mortgage ease your mind on these troubling economic issues?  Well as I explained to my customer yesterday, the adjustable rate reverse mortgage allows you to have a monthly payment sent to you for life from the proceeds of a reverse mortgage.  My customer qualifies for a large lump sum, but she does not need that much, just a few hundred dollars more a month will really allow her more flexibility, so that is the option she is most considering.

If you or anyone else you know is worried about the cost of living rising, especially if you are over 62 and on a fixed income, you should really consider the reverse mortgage.  This program can be set up to pay off any debts you have and then any additional money you qualify for can be sent monthly to you to help supplement your retirement.  To see if you qualify, try our reverse mortgage calculator.

Here are some additional statistics found from the AARP survey:

  • 50% of baby boomers don't think they will ever be able to retire
  • 59% say the current economy will make them rely on social security and Medicare more
  • 62% say they are the most concerned about health expenses
  • 73% said not having financial security in retirement causes anxiety
  • 71% are concerned about paying too much in taxes
  • 30% say they regularly worry about keeping up with their mortgage payment
  • 72% of non retired boomers believe they will have to delay retirement

 

Wednesday, September 12, 2012

Reverse Mortgage vs. Home Equity Line

Reverse Mortgage vs a HELOCOne of the biggest reverse mortgages myths are that they are very expensive.  While they do have fees associated with them that are often misunderstood (and a lot lower than they used to be), many financial and estate planners still recommend their senior clients look at a home equity line of credit over a reverse mortgage.  This brings up the debate, which is better...a HECM or a HELOC?

The HELOC stands for home equity line of credit and is available at almost any bank with relatively low fees.  In some cases you can borrow up to 100% of the value of your home using a HELOC and you only pay interest on the money you use.  This sounds good to most people, but there are some other things to know.  Most home equity lines of credit have adjustable rates tied to the prime rate.  This has not been much of an issue the past few years, but once the economy starts to recover the Fed will have to start raising interest rates which directly affect the prime rate.  This rate can change monthly which means your payment can change monthly.  HELOC's also have a monthly payment associated with them that must be paid or else the bank will foreclose.  You also have to show income, assets and a good credit score in order to qualify for a home equity line of credit.

The HECM stands for home equity conversion mortgage or reverse mortgage.  The reverse mortgage is not as radially available as the HELOC, meaning not all banks offer them.  The closing costs for a reverse mortgage are higher than a home equity line as well and depending on your age you can borrow between 62 and 78% of the value of your home.  To get a HECM loan though you do not have to have high income, lots of assets, or good credit to qualify, you just have to be 62 or older and have enough equity in your house.  With the reverse mortgage you have no monthly payment due while you live in your home and the only way to be foreclosed on is if you fail to pay your property taxes and insurance.  The reverse mortgage has a variable rate option with rates comparable to home equity lines of credit as well as a fixed rate loan.

So which is better?  That depends on your situation.  If you have a short term need for some money that you will be able to pay off quickly then the home equity line of credit is probably your best choice.  Or if you do not plan to stay in your home much longer, meaning less than 2-3 years then the HELOC is what you should consider.  On the other hand, if you are on a fixed income and are planning to stay in your home, you should seriously look into the reverse mortgage.  With a fixed income it would probably be harder to take on another payment, especially one that has the potential of changing all the time.  When you have a reverse mortgage once you have the loan, it cannot be taken away.  The HELOC on the other hand can be closed by the bank if they feel you are a potential credit risk, even after the line has been open and even if you are current on your payments!

The reverse mortgage is not for everyone, but if you are looking into taking out a home equity line of credit on your home, before you do so, do some research on the reverse mortgage.  You may be surprised at what you find.

Tuesday, September 11, 2012

Let Us Never Forget

September 11th FlagsToday marks the 11th anniversary of the September 11th terrorist attacks.  I remember how the country came together after that day.  We were not Republicans, Democrats, or devided by religious beliefs.  We were not black or white, or from the North or the South.  We were all Americans!!  It was too bad such a terrible thing had to happen to wake us up and remember that fact, but I hope we will never forget.  Never forget that we are all Americans and citizens of the greatest country in the world and we should be proud to say so.  Never forget that we have overcome so much in our history and that by working together we can accomplish anything!  Please enjoy the pictures and take a moment to remember how blessed we are in this country.
Support Our Soldiers

Proud To Be An American

Never Forget September 11th

God Bless The USA

Friday, September 7, 2012

Choosing a reverse mortgage specialist

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I found a great article online yesterday and because it has such good information I thought I would just post the whole thing here on the blog.  If you are looking into a reverse mortgage and have done some research and have decided it looks beneficial, but you don't know who to go to for help getting the loan...this article is for you.  The article was written by Amara Rose and was posted on HECM World's blog.  The link to the original article is here.

Here is what she says:

Six Steps to Selecting a Reverse Mortgage Professional

You’re retired, have solid equity in your home, and have been seeing ads for reverse mortgage, or HECM (home equity conversion mortgage). You’re thinking this might be beneficial for you now. How do you go about choosing the right professional to assist you?
Here are six guidelines for selecting a reverse mortgage originator (also known as a loan officer):
#1: Experience. In any field, experience is primary, and nowhere is this more crucial than when it comes to your home and financial security. Ask how long the reverse mortgage professional has been doing this type of work, and note from their response whether he or she seems to enjoy it.
A corollary to the above: is reverse mortgage lending all this person does? You want someone who has a passion for serving seniors, and who will be focused on you — not someone who’s dividing their time and attention between other types of loan activity. Because reverse mortgage is unique, it requires a dedicated specialist. After all, you wouldn’t consult a foot specialist for a hearing problem, right?
#2: Education. Like other professions, the reverse mortgage field has licensing standards. An NMLS (Nationwide Mortgage Licensing System) number tells the consumer a reverse mortgage originator has “passed a background check,” so to speak, and is generally competent to handle loan transactions. Another measure of education is how well the professional knows the history of the reverse mortgage industry, and can explain how this impacts you as a potential borrower today.
You’ll also want to ask about continuing education. Someone who has earned their CRMP designation — Certified Reverse Mortgage Professional (NRMLA) — has demonstrated superior knowledge and competency in the reverse mortgage field, and is dedicated to upholding the highest ethical and professional standards.
#3: Reputation. Business, like life, turns on relationships. Ask your prospective reverse mortgage originator which professionals in the community can recommend them. Financial planners, elder law attorneys, CPAs and senior care providers are all good sources who can potentially speak to a loan officer’s reputation.
#4: Resources. You want to be sure the company you choose can meet your needs. Ask whether they offer a variety of reverse mortgage products, such as both the Traditional (Standard) and “Saver” HECM, as well as fixed and adjustable loan rates. A full portfolio of products gives you more options for making the best choice for your specific situation.By the same token, ask, “How large is your organization?” While you don’t need to deal with a huge company, you do want the group you select to have a consistent track record of closing loans and handling consumer needs.
#5: Service after the sale. A reverse mortgage, by its very nature, implies an ongoing relationship. Ask, “What’s your policy after the sale is complete? Will you be available to answer any questions I may have, and later for my children if they need help selling the house?” Ideally, the company you choose will have been around long enough to have assisted the families of those who’ve purchased a reverse mortgage, once it’s time to pay back the loan.
#6: Planner vs. Product Promoter. As noted above, you’ll do best with a loan officer who cares deeply about seniors and is focused on the big picture: your income, your expenses, your health, how long you plan to remain in your home, etc. — all of which helps to shape the type of product you choose. A reverse mortgage professional whose first concern is senior service will be your partner in making a wise financial decision.

I hope you enjoyed Amara's article, now here's my plug...  If you are interested in learning more about the reverse mortgage program, I feel like Reverse Mortgage USA's Utah branch meets or exceeds every one of these 6 qualifications.  To learn more, visit our About Us page.

Wednesday, September 5, 2012

Do both the husband and wife need to be on the reverse mortgage loan??

Distressed SeniorAs a reverse mortgage loan officer I make a commission based on the loan amount when the loan closes and funds, so the higher the loan amount the more money I make.  Sounds good right?  I recently ran across two different couples who are now having issues with their reverse mortgages because some greedy loan officer decided to make more money instead of do what is best for the customer.  So in answer to the title question...YES you do not need to have both the husband and wife on the reverse mortgage loan.  BUT there are some risks to this, so read on to learn more!

The first couple I met with got a reverse mortgage about 3 years ago.  At the time the husband was 64 years old and the wife was 61, but would be turning 62 in 3 months.  Instead of waiting until they both were 62 the loan officer pushed them into doing the loan in just the husbands name only.  At the time the loan officer probably said you need to do this now, you never know what home values will be like in 3 months, or what rates will do; all the while thinking to himself I want to get paid now instead of in 3 months.  This is unfortunate because now the couple came to me to add the wife onto the loan (she is now 65), but because they didn't wait 3 months back then, this will now cost them over $20,000 now because the value of their house has dropped since then and they have accrued interest over the past 3 years.  I did not do the loan for this couple although they really considered pulling the money out of their retirement account to make the deal work.  I advised them to talk to their financial planner instead and use a portion of the money they were going to have to bring in to do the reverse mortgage to buy a life insurance policy to cover the difference if the husband passes away prematurely.  I feel bad for this couple, and I hope the loan officer they worked with 3 years ago is not in this business anymore.

The second couple I am working currently with had the exact same thing happen to them only at the time they did the original reverse mortgage, both spouses were old enough to do the loan, but the loan officer at the time again was greedy and only put the loan if the husbands name because he is 12 years older so the loan amount would be bigger so he could make a higher commission.  This couple is in a bad spot now because the husband is being forced to move into a long term care facility because he has early Alzheimer's, so a life insurance policy will not help.  In this situation, the wife is not on the loan and is going to loose the house because the husband has moved out and will not be coming back.  The families estate attorney found me via this blog and my reverse mortgage website and I am now in the process of refinancing the loan for this couple and adding the wife to it.  The situation is the same as the first couple and she is going to have to bring in a large amount of money to to add herself to the loan, but for her, that is better than moving.

Bottom line is; if you are considering a reverse mortgage and your loan officer is counseling you to only have one spouse on the loan YOU NEED TO GET A SECOND OPINION!  There are situations where this is the only option and that is OK, but before you go ahead, think about the long term consequences.  If you are in need of a second opinion, call our company at 1-800-431-9250 and we will be happy to give you all your options, even if you don't use us for the loan.