Dissecting The Differences In Reverse Mortgage Professionals

When you start navigating the waters of reverse mortgages, you will undoubtedly come across MANY different companies and individuals ready and willing to help.  Flashy ads, website calculators, famous spokesmen, and more.  But who are all these people?  And what is the difference between them?  How do you know what is the best fit for YOU?

Here’s some information I think anyone considering a reverse mortgage needs to know about the various professionals who work in the industry:

Banks and Credit Unions – Most local banks and credit unions do not offer reverse mortgage loans, although sometimes the larger ones will.  Unfortunately seeking a loan through them can often mean little or no face-to-face time, and it’s not uncommon for these banks to leave the industry down the road.  At one time Wells Fargo and Bank of America were in the business, but they quit, leaving their borrowers with loans that few employees can understand and little help if reverse mortgage customers need it. 

Brokers – A reverse mortgage broker is a third party individual that is licensed by the state but doesn’t work directly with a lender, instead they essentially shop the marketplace.  When working with a broker, borrowers will pay higher fees because they will have to cover the costs of the broker.  In addition, because all transactions run through a third party, things can easily get slowed down or even stalled completely.

Direct Lender Specialists – This is the category I fall into.  Working directly with a lender that specializes in FHA insured HECM reverse mortgages, such as Retirement Funding Solutions, direct lender specialists are able to offer local, personal, face-to-face time with clients, and eliminate the need for costly third-party fees.  We are able to do all this while ensuring the smoothest, most efficient transaction possible because they are handling the loan and not farming it out to another company.

Reverse mortgages are available to individuals and married couples age 62 and older.  These FHA insured loans allow homeowners to live mortgage and loan payment free until they pass away, permanently leave the home (meaning 12 consecutive months), or they default on financial responsibilities associated with the home, such as property taxes or homeowner’s insurance.  The funds are available via monthly installments, a line of credit, a lump sum, or even to purchase a home

Janice Cohen is a HECM Reverse Mortgage Specialist serving the North Hollywood, Sunland, Tujunga, Burbank, Glendale, La Crescenta, Montrose and many more areas of southern California.  Click here to contact Janice and learn if reverse mortgage is right for you.

3 Things to Do with a Reverse Mortgage in California

One of the best parts of a reverse mortgage is the borrower(s) can do anything they’d like with the funds – while also living mortgage payment free.  In California, seniors are more active than ever, whether it be traveling, home improvements, or visiting with family and grandchildren often.

Here are 3 fulfilling ways seniors are using their reverse mortgage funds:

Take that trip they always dreamed of – After years of working hard, saving for retirement, and raising a family, some reverse mortgage borrowers are using a portion of their funds to take the bucket list vacation they’ve always dreamed of.  This option becomes less probable as they age and makes for a fantastic celebration by the more active seniors.

Visit with loved ones – Whether it’s a sister who hasn’t visited in 10 years, or children and grandchildren, or long lost friends, using reverse mortgage funds to visit with loved ones is a very common today.  Travel can be expensive and it holds us back far too often from the visits that mean the most to us, especially as we age.

Make home repairs or upgrades – After a life of caring for others, senior homeowners often find parts of their home may have been neglected.  When using a reverse mortgage to tap into home equity without a subsequent loan payment borrowers often make those repairs or upgrades they have been longing for.  Whether it’s a sunroom addition or a kitchen remodel, or just dutiful repairs, this is never a bad option.

Reverse mortgages are available to homeowners 62 and over.  This FHA insured loan offers funds through a lump sum, monthly installments, or a line of credit and eliminates monthly mortgage payments.  With many protections in place to ensure borrowers are adequately educated before using this option, such as required third-party counseling, reverse mortgages are gaining in popularity among retirees from all walks of life.  And a reverse mortgage for purchase option is available for those looking to purchase a new residence.

Will A Reverse Mortgage Affect Social Security, Medicare & Pension?

Reverse Mortgage for Purchase Loveland Fort Collins Greeley Longmont Westminster Colorado Cheyenne Laramie WyomingA very common concern among seniors and adult children when considering a reverse mortgage is how it will affect social security, medicare, and even certain pensions.  For many seniors, these benefits are a large part of their income. Fortunately, because the funds from a reverse mortgage are NOT considered taxable income, a borrower’s benefits will not be affected when taking out a reverse mortgage.

On the other hand, borrowers who have Medicaid, TANF, Food Stamps or SSI may see those benefits affected by this additional income.   Because these programs are government sponsored programs with strict approval guidelines based on all sources of income, even non-taxable income, there is a possibility the additional cash flow will need reported.  Other supplemental and assistance programs would need to be addressed on a case by case basis.  Working with a reputable reverse mortgage lender and required third party counseling will ensure all your questions are answered thoroughly and honestly.

Reverse mortgages are available to homeowners 62 and older.  The proceeds can be received as a lump sum, as monthly installments, or a reverse line of credit and can be used for any purpose the borrower sees fit.  This FHA insured loan allows the borrower(s) to live mortgage payment free.

Janice Cohen is a HECM Reverse Mortgage Specialist serving the North Hollywood, Sunland, Tujunga, Burbank, Glendale, La Crescenta, Montrose and many more areas of southern California.  Click here to contact Janice and learn if reverse mortgage is right for you.

How Rising Interest Rates Affect Reverse Mortgages

Northridge, Reseda, Encino, Granada Hills, Sylmar, San Fernando, Sun Valley Reverse Mortgage HECM Janice Cohen CaliforniaInterest rates have been at historic lows for years.  This has afforded thousands of Americans to the ability to secure home loans for their dream house.  It’s also worked in favor for those who have made the decision to tap in their home equity using a reverse mortgage.  But interest rates affect a conventional loan differently than a reverse mortgage.

HECM reverse mortgage are insured by the Federal Housing Administration (FHA), and are available to homeowners 62 and over.  These tax-free loans convert a portion of home equity into cash without incurring a loan payment.  Borrowers can access the funds via monthly installments, line of credit, a lump sum, and even to purchase a home. The Department of Housing and Urban Development (HUD), which regulates the reverse mortgage industry, sets a “floor” rate of about 5%.  As interest rates rise and fall above this floor rate, borrowers will receive less or more in proceeds.  In fact, even a small rise of 1% above the floor rate can decrease available funds by as much as 20%.

Fortunately, once a homeowner has tapped into a reverse mortgage they lock in the interest rate and proceeds will never decrease, no matter what the market does, and the funds available will increase over time when using the line of credit option.  In addition, even if the home decreases in value below the amount of their loan proceeds, they will never be responsible for more than the home is worth.

Bottom line: with interest rates on the rise, now is the time to act if you’re considering a reverse mortgage.

Janice Cohen is a HECM Reverse Mortgage Specialist serving the North Hollywood, Sunland, Tujunga, Burbank, Glendale, La Crescenta, Montrose and many more areas of southern California.  Click here to contact Janice and learn if reverse mortgage is right for you.

Should Your Financial Planner Be Discussing Reverse Mortgage?

When financial planners counsel retirees on how to best leverage their retirement portfolio, social security, and other assets, considering a reverse mortgage was long not part of that conversation – but this is beginning to change.

As the myths of the industry are laid to rest, many professionals are beginning to better understand how reverse mortgage can be used as a financial planning tool for seniors who are on a strict budget or who want to live their golden years to the fullest.  Reverse mortgages can often mean the difference between just living and living life to the fullest.

A few tips for financial planners:

  • Seek out and work with a reputable reverse mortgage specialist who has strong ties to the community, lends from an organization that is a member of the Better Business Bureau, and is associated with the National Reverse Mortgage Lenders Association.
  • Make sure you fully understand the information you may be offering your retiree client.  With the amount of misinformation within the industry, if you are not 100% sure of an answer, call your trusted reverse mortgage specialist to ensure the information you are providing is accurate.
  • Communicate with adult children who may have concerns and make sure they fully understand the process from A to Z.  Eliminating misinformation is key.
  • Remember, reverse mortgages are not one-size-fits-all.  Be creative and comprehensive when considering adding a reverse mortgage to a long term retirement plan.  

Janice Cohen is a HECM Reverse Mortgage Specialist serving the North Hollywood, Sunland, Tujunga, Burbank, Glendale, La Crescenta, Montrose and many more areas of southern California.  Click here to contact Janice and learn if reverse mortgage is right for you.

Three Things You Never Knew About A HECM Reverse Mortgage

Three Things You Never Knew About A HECM Reverse Mortgage

Northridge, Reseda, Encino, Granada Hills, Sylmar, San Fernando, Sun Valley Reverse Mortgage HECM Janice Cohen CaliforniaReverse mortgages are available to senior homeowners 62 and over, even married couples.  The borrower will live mortgage payment free and always retain the title to the home.  There are many myths and misconceptions that surround reverse mortgages – but there are also some not-so-known perks to the loans.  

Here are my top three:

1.) Most Reverse Mortgages are Insured By the FHA

It is normal for older adults to be concerned with the welfare of their children after their passing. This is one of the reasons many seniors balk at the idea of a reverse mortgage – they don’t want to “saddle their children with their debt.”  

Fortunately, there are safeguards in place to address this issue.

Almost all reverse mortgage are FHA insured. This means under current guidelines there is a large equity reserve that will always protect their home from going upside down.  Even if the homeowner lives to be 110, has used all the equity in the home, and the market has crashed – the heir will NEVER owe more than the home is worth.  FHA/HUD have guaranteed that they will cover the bank’s losses should the situation arise.  This leaves the homeowner and their estate protected against any possible losses.  

It’s important to also know that on the flip side, if the home is worth more than it sells for after the owners passing, the heirs will receive any excess equity available.  The bank will never take more than what is needed to pay off the loan. 

2.) Reverse Mortgages Have the Option of a Growth Line of Credit

For many years, there were only two ways to tap into home equity when obtaining a reverse mortgage – a lump sum or monthly installments.  This is has changed and HUD has added two new options – a Reverse Mortgage Line of Credit (HECM-LOC) which works similar to a Home Equity Line of Credit (HELOC), with the exception the borrowers will NOT be required to make repayments, and the other option is a Reverse Mortgage for Purchase, which allows seniors to use a reverse mortgage to make a home purchase. 

The line of credit is just as it sounds, it is a line of credit with funds that are available for the homeowner to take when they need it. But the major benefit to this line of credit is it also has a growth factor attached to it. This means that any money left in the line of credit will grow at a rate that is equal to the interest rate and mortgage insurance rates on the loan. 

Here’s an example:

Imagine your HECM-LOC has an interest rate of 4.5% and a mortgage insurance rate of .5%. The combined rate is 5.0%.  You have $100,000 in this line of credit which you don’t plan on using for 15 years unless you need it. That $100,000 is going to grow by 5% annually until you begin accessing those funds.

After year one this line of credit is up to $105,000. After year five the LOC is up to $127,500. And After 15 years the total funds in the line of credit are up to nearly $208,000. In 15 years, that 5% return has grown his available funds by 108%!

3.) A Reverse Mortgage Can Be Used To Purchase A Home

Although the Reverse Mortgage for Purchase program has been around for some years, it’s still relatively unknown – even in the real estate community. 

Reverse mortgages are an excellent option for retirees looking to buy a home near or far.  These loans require a down payment at the time of purchase, but beyond that there are quite a few differences than using a conventional mortgage.  

Borrowers are often able to purchase outside their expected “cash purchase” price range, because the cash is used as a down payment and the remainder of the purchase amount is covered under the reverse mortgage loan, while the borrower lives mortgage payment free.  The borrower will also always retain the title to the home, just as they would with a conventional mortgage.  These loans are also FHA insured, so everything discussed above still applies in that regard. The borrower can own other properties and still qualify as long as the home being purchased is their primary residence.  

Janice Cohen is a HECM Reverse Mortgage Specialist serving the Northridge, Reseda, Encino, Granada Hills, Sylmar, San Fernando, Sun Valley and many more areas of southern California.  Click here to contact Janice and learn if reverse mortgage is right for you.

Gray Divorce Rates Are Climbing – Can Reverse Mortgage Help?

Gray Divorce Rates Are Climbing – Can Reverse Mortgage Help?

A Pew Research poll highlighted a very interesting trend among divorce in the United States – while divorce rates have drastically declined among younger adults, it’s nearly doubled among adults 50 and over in the past 25 years. 

The truth is, it’s becoming more and more common for seniors to divorce after retirement.  This is happening for various reasons, but a big one is that retirement now lasts for decades versus only years, and many people are looking to make those golden years the best yet.

But senior divorces can get messy, as there are often many assets to sort out.  During divorce negotiations, a home is often one of these assets.  This home is possibly owned free and clear, or with a lot of equity.  For divorcees age 62 and over, a reverse mortgage can be used as a tool to help with settling this asset during divorce.  The great thing about reverse mortgage is it allows someone to stay in the home and live mortgage payment free, AND access funds from the equity.  Here are a couple scenarios in which reverse mortgage would be of benefit.

Scenario 1: When splitting the home asset, instead of selling the home, one party could be allowed to stay in the home and obtain a reverse mortgage, of which the other party receives the funds from.  This can be a win-win.  In cases like this, the financial settlement can even be wrapped into the loan if the divorce is final before the closing.  This would mean a reverse mortgage would be part of the divorce settlement discussion.  It is important to understand that the party that remains in the home will be responsible for certain obligations pertaining to the home, such as property taxes and homeowners insurance.

Scenario 2: Possibly you’re used to living off two incomes – whether it be from work, or social security and pensions.  Suddenly dropping down to one income can be devastating.  In cases like this getting the home in divorce proceedings can be a huge benefit, as once the divorce is final, a reverse mortgage could be obtained on the home.  The funds could come in monthly installments, a line of credit (that grows), or a lump sum.  In addition, if you wanted to sell the home and move, a reverse mortgage could be used to purchase the new home – and can even allow you seek homes that would otherwise not be in your price range.  The best part?  You will always live mortgage payment free.

If you are considering a divorce, or sifting through the process, don’t hesitate to contact me to further understand how reverse mortgage can help, and whether or not you qualify.

Janice Cohen is a HECM Reverse Mortgage Specialist serving the North Hollywood, Sunland, Tujunga, Burbank, Glendale, La Crescenta, Montrose and many more areas of southern California.  Click here to contact Janice and learn if reverse mortgage is right for you.

Understanding Elder Law

Understanding Elder Law

Northridge, Reseda, Encino, Granada Hills, Sylmar, San Fernando, Sun Valley Reverse Mortgage HECM Janice Cohen CaliforniaElder law is a relatively unknown segment of law and is often overlooked when seeking legal solutions.  But for some seniors and their families an elder law attorney may be exactly what they need.  Elder law is very broad and includes things like estate planning, probate, guardianship, real estate, nursing home neglect and a dozen other areas of law that affect the elderly. Typically one lawyer will not have expertise in every area, but will instead work with a network of attorneys who can supplement in specific areas when needed and vice versa.  Also, keep in mind just because an individual is elderly does not mean they need an elder law attorney.  Elder law is focused on legal problems specific to the elderly.  Concerns with other areas of law may best be handled by attorneys dedicated to those areas.

An elder law attorney should be educated and informed on reverse mortgage.  It is common for them to receive questions from clients, former clients, and their families about reverse mortgage when establishing estate plans or when they are considering a reverse mortgage for the first time.  Although reverse mortgages can be an excellent and safe tool for many homeowners, they are not for everyone and are most effective when used as part of a financial and estate plan.  It is highly encouraged to make sure any question receives an adequate answer when considering reverse mortgage – and often elder law attorneys are part of that equation.  This can also help with avoiding reverse mortgage scams.

Here are a few questions to ask when seeking out a an elder law attorney:

  • How long has the attorney been practicing?
  • What percentage of the attorney’s practice is devoted to elder law?
  • Does his or her practice emphasize a particular area of elder law? (for instance, guardianship or other specific work)
  • How much elder law training has the attorney had, and from what organizations?
  • Is the attorney a member of the National Academy of Elder Law Attorneys?
  • Will the attorney be able to work within your time limitations?

In addition to a legal network, an elder law attorney should be familiar with the “elder network”, a network of public and private community resources to assist seniors in various capacities.  This should include a reputable reverse mortgage lender.

Janice Cohen is a HECM Reverse Mortgage Specialist serving the North Hollywood, Sunland, Tujunga, Burbank, Glendale, La Crescenta, Montrose and many more areas of southern California.  Click here to contact Janice and learn if reverse mortgage is right for you.

Will A HECM Reverse Mortgage Affect Social Security, Medicare & Pension?

Northridge, Reseda, Encino, Granada Hills, Sylmar, San Fernando, Sun Valley Reverse Mortgage HECM Janice Cohen CaliforniaWill A HECM Reverse Mortgage Affect Social Security, Medicare & Pension?

A very common concern among seniors and adult children when considering a reverse mortgage is how it will affect social security, medicare, and even certain pensions.  For many seniors, these benefits are a large part of their income. Fortunately, because the funds from a reverse mortgage are NOT considered taxable income, a borrower’s benefits will not be affected when taking out a reverse mortgage.

On the other hand, borrowers who have Medicaid, TANF, Food Stamps or SSI may see those benefits affected by this additional income.   Because these programs are government sponsored programs with strict approval guidelines based on all sources of income, even non-taxable income, there is a possibility the additional cash flow will need reported.  Other supplemental and assistance programs would need to be addressed on a case by case basis.  Working with a reputable reverse mortgage lender and required third party counseling will ensure all your questions are answered thoroughly and honestly.

Reverse mortgages are available to homeowners 62 and older.  The proceeds can be received as a lump sum, as monthly installments, or a reverse line of credit and can be used for any purpose the borrower sees fit.  This FHA insured loan allows the borrower(s) to live mortgage payment free.

Janice Cohen is a HECM Reverse Mortgage Specialist serving the North Hollywood, Sunland, Tujunga, Burbank, Glendale, La Crescenta, Montrose and many more areas of southern California.  Click here to contact Janice and learn if reverse mortgage is right for you.

What Do Retirees Really Want?

Agoura Hills, Oak Park, Calabasas, Chatsworth, Canoga Park, Woodland Hills Reverse Mortgage HECM Janice CohenIf you find yourself yearning for a retirement of comfort in your own home in a community you love, you are definitely not alone.  Here are some pretty telling facts and statistics surrounding the desires of older adults in the U.S..

According to research by the American Association of Retired Persons (AARP):

  • Nearly 90 percent of seniors want to stay in their own homes as they age.
  • Even if they begin to need day-to-day assistance or ongoing health care during retirement, 82% would prefer to stay in their homes.
  • Most pre-retirees expect they will be able to live independently during retirement; only 14% expect they will need day-to-day assistance or ongoing health care at any point during their retirement.
  • Thinking about parents’ getting older is on the minds of 88% of adult children.
  •  75% of adult children and 69 % of parents think about the parents’ ability to live independently as they get older
  •  AARP identified housing features that seniors find are especially important in the later years: – Safety features such as non-slip floor surfaces (80 percent)

    – Bathroom aides such as grab bars (79 percent)

    – A personal alert system that allows people to call for help in emergencies (79 percent)

    – Entrance without steps (77 percent)

    – Wider doorways (65 percent)

    – Lever-handled doorknobs (54 percent)

    – Higher electrical outlets (46 percent)

    – Lower electrical switches (38 percent)

From the National Assocation of Home Builders:

  • 75% of remodelers report an increase in inquiries related to aging in place.
  • The NAHB predicts that aging in place remodeling market to be $20-$25 billion.  That’s about 10 percent of the $214 billion home improvement industry.

According to the MetLife Mature Marketing Institute:

  • 91% of pre-retirees age 50 to 65 responded that they want to live in their own homes in retirement.  Of that group, 49% want to stay in their current homes, and 38% want to move to new homes

Whether it’s the desire to simply stay put through retirement, or to make modifications to the home, or even to purchase a new home, a reverse mortgage is a flexible tool to help finance any of these.  

Reverse mortgages are available to homeowners 62 and over, including married couples, with many protections in place to ensure borrowers are adequately educated before using this option, such as required third-party counseling.  Reverse mortgages are gaining in popularity among retirees from all walks of life.  A reverse mortgage for purchase option is available for those looking to purchase a new residence.

Janice Cohen is a HECM Reverse Mortgage Specialist serving the North Hollywood, Sunland, Tujunga, Burbank, Glendale, La Crescenta, Montrose and many more areas of southern California.  Click here to contact Janice and learn if reverse mortgage is right for you.