3 Important Changes for Reverse Mortgages in 2017

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonThe reverse mortgage program is constantly evolving and has been since it’s inception nearly six decades ago.  With the ever changing needs of older Americans and the revolving door of politics, making positive movement is a necessary part of the big picture, and these changes are largely beneficial to the industry as a whole and it’s consumers.

Here’s what to look for in 2017:

Increased Loan Limits – The loan limit for HECM reverse mortgages is increasing for the first time in nearly a decade.  The limit will change from $625,500 to $636,150.  The FHA made the limit increase announcement on December 1, 2016 and it went into effect on January 1, 2017. This new limit will apply only to case numbers issued on or after January 1, 2017.

Interest Rates Likely To Rise – In December 2016 the Federal Reserve raised interest rates for the very first time since 2009 and it’s been indicated they expect to raise rates three more times in 2017.  For those considering a reverse mortgage, the current interest rate is a factor in how much they can borrow but once a homeowner has a reverse mortgage secured on their home, they lock in the interest rate. In addition, the funds available will increase over time when using the line of credit option based on interest rates.

Rising Home Prices – Home values in many markets are nearly back to where they were 10 years ago prior to the housing collapse.  Because another factor that goes into how much a borrower can receive from a reverse mortgage is the appraised value of the home, this is important to the industry and those tapping into the equity of their home.

Reverse mortgage is an individualized, specialized loan for those 62 and older that allows seniors to tap into the equity of their home while living mortgage and loan payment free. The funds can be accessed via a lump sum, line of credit, monthly installments, or even to purchase a home.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

 

Helping Your Parents with a Reverse Mortgage

Posted on by Janis Layman

id-10041109Perhaps your parents raised you in the home they are now ambling about. As you see them begin to slow, or have to jump on a plane every time they wish to see you, thoughts of helping them to have an easier time come across your mind. After all they deserve at this time of their life to relax, do what they wish to do, and be able to manage their health and their finances with comfort.

Considering a reverse mortgage is one good option. It gives more wiggle room to work with when balancing the growing needs of health, home, and retirement.

As you discuss the future and it’s possibilities, there are a few questions to ask yourself and everyone else involved.

First, do you or other siblings have concerns about inheritance and/or equity?  Your parents probably care that all of you feel you have received from them as they pass. While this discussion is not always easy, it is undeniably beneficial. Talking will give clarity, which in turn provides direction. It also gives everyone a chance to be heard.

Second, do you have financial resources to help your parents?  Health needs as we age are difficult to determine, but it is important to build in a buffer for the unexpected.  The stress of aging is enough in and of itself, being able to take care of the costs should not have to be an additional worry for those that raised you.

Another good question that only your parents can answer is, ‘What are my parent’s wishes about staying in their home, especially if their medical needs grow?’ For some, they are ready to let go of the home of their youth and family, wanting to change and simplify their lifestyle. For some, being closer to you is the most important desire. And for some staying in their home as long as possible is the most important wish that could be fulfilled. Since the decision about reverse mortgage as a way to fulfill desires is a big one, looking toward the future and developing a plan will only benefit everyone – and ultimately make your parents happy.

Reverse mortgage is an individualized, specialized loan for those 62 and older that allows seniors to tap into the equity of their home while living mortgage and loan payment free.  The funds can be accessed via a lump sum, line of credit, monthly installments, or even to purchase a home. If you are planning ahead let your specialist guide you creatively to suit your needs and desires.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

Reverse Mortgage Opens Doors to a Fulfilling Retirement

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonRetirement was once considered a “golden age” in decades past. It was held as a time for you to relax and enjoy life after years of hard work for your family and your assets. This can still be possible, even in the ever changing society with it’s unexpected expenses.

Reverse mortgage could be the way for you to fulfill your long held desires.

In years past reverse mortgage was not often considered by financial planners when helping those approaching 62 manage the pieces of their retirement lifestyle – including social security, assets, savings, and all the rest. This has changed.

Reverse mortgage is a strong viable option even in the phase of financial planning. The equity that builds up in the home could rightly be accessed to give you security at the least and make the difference between just making your monthly bills to actually enjoying your life in new ways.

This being the case, a reverse mortgage or HECM (Home Equity Conversion Mortgages) should be a part of the conversation. When choosing a financial planner, find out if they have learned about reverse mortgage options.  Seek a planner that has worked with a credited reverse mortgage specialist that is part of the Better Business Bureau, is an active part of the local community, and is a member of the National Reverse Mortgage Lenders Association (NRMLA).

Involve your children in the process. Find out what they want, express to them what you want and keep the dialogue going.

Reverse mortgage is an individualized, specialized loan for those 62 and older.  If you are planning ahead let your specialist guide you in the many scenarios that are possible. Think creatively about your needs and desires.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

 

Selling a Home with a Reverse Mortgage – What You Need to Know

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonFor many that obtain a reverse mortgage, the plan is to stay and age at home, but sometimes reasons come up that the homeowner will want or need to sell the home.  Is this possible if there is a reverse mortgage on the home?  And what does it look like?

Can a home with a reverse mortgage be sold?

Yes, the home can still be sold at any time, just like with a traditional mortgage.  When the home is sold, the borrower will repay the loan balance and any outstanding closing fees from the proceeds of the sale.  Any additional funds from equity will be theirs to keep.

Are there penalties?

No, there are no penalties when selling a home that has a reverse mortgage loan on it.

How are the funds from the sale dispersed?

When the home is sold, repayment of the reverse mortgage loan will be first, followed by any outstanding liens or other obligations, then the homeowner will keep any additional proceeds.

Do I have to notify the reverse mortgage lender of my intent to sell?

Not necessarily, but it is a good idea to start there and find out what the outstanding balance is.  Having all the facts upfront will help with decision making all around.

Bottom line: Selling a home that has a reverse mortgage loan against it is very similar to selling a home that does not have a reverse mortgage.  As long as you are aware of the few differences, it is a smooth process.

Reverse mortgages are available to seniors 62 and over as long as the home the loan is being used against is the primary residence and there is some equity available.  The funds are accessible to the borrower in a variety of ways including monthly installments, line of credit, lump sum, and even a tool to purchase a new home.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

Are You Prepared If Your Spouse Dies?

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonRegardless of age, losing a spouse is difficult – and the impending “business” that comes along with it doesn’t make it any easier.  This is why we should all ask ourselves at some point, “Am I prepared if my spouse dies?”.  There are so many various aspects to being “prepared”, and although I can’t help with many of them, I can help with some simple suggestions to making sure you aren’t stuck with unexpected questions.

It’s not uncommon in marriages or partnered relationships for each spouse to take care of different bookkeeping tasks.  For example, it’s very common for the husband to manage retirements funds – pensions, IRA’s, etc.  While the wife may handle personal address books or paying bills.  Take a minute and think about this.  Not only what  you may not know, but what your spouse may not know.

Here are some suggestions to putting this information in order:

• Begin by making a list over a week or two, and ideally an entire month.  Make note of what “business” you do.  How many passwords did you need online?  How many account numbers on the phone?  What about PINs?  The results may surprise you.  In today’s high tech yet overly scammed world, everything is secured under lock and key.

•  Although it is best if both spouses can contribute to this exercise it is not a requirement.  Either way, spend some time brainstorming together.  We often will remember things when discussing them with someone else.

• It’s important to make a physical list of this information, whether typed or handwritten.  What you shouldn’t do though is save this information online.  Hackers will seek data that includes account numbers, logins, and passwords and this could lead to compromising your accounts and even identity theft.  Even if you think it’s secure, there really is little guarantee that is true.  Keeping this list with your most important documents – such as birth certificates, titles to homes and vehicles, etc – is going to be your safest bet, but make sure both spouses know where to find it.

What to include on your list:

Name and phone number of company, account numbers and any PINs associated.  If using online management of account, include website URLs of where to login, login name and password, and any auto pay information.  If there are specific people you work with at these companies, include their names.

If only one spouse is listed on the account, make an effort to add the other one.  I recently witnessed an elderly woman at the DMV who was unable to renew her driver’s license because all the mail that came to the home was in her husband’s name.  This is more common than many people realize – and often they don’t even know until they’re caught in jam.

• Home loan
• Home insurance
• Car loan
• Car insurance policies
• Health insurance policies
• Life insurance policies
• Bank accounts
• Credit card accounts
• Pension, IRA, annuities, etc
• Utilities – electric, water, gas, phone, trash
• Facebook, LinkedIn, etc
• Contact information for family and friends
• Contact information of bankers, retirement or financial planners, loan officers
• Contact information for doctors, dentists, pharmacies, veterinarians, etc (and a little info about what each one is for)

These lists will vary from person to person, so make sure to add your own ideas.  Also be sure to update it when anything changes or is added – because hopefully you won’t need it for quite a few more years!

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

Everything You Need to Know About a Reverse Mortgage Line of Credit

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonWith the versatility available from reverse mortgage funds, it’s hard to not find a match for your needs.  Whether looking to purchase a new home, increase monthly cash flow, pay off a debt such as a HELOC, or create an easy to access nest egg to protect assets, there is a way to use this creative retirement tool that will suit you.  This article is going to focus on one that is quickly gaining in popularity – the Reverse Mortgage Line of Credit.

What is a Reverse Mortgage Line of Credit?

The line of credit option allows homeowners to tap into the equity of their home and have access to the funds whenever needed, but unlike a lump sum or monthly payments, they don’t have to withdraw any funds at all and can keep it as a safety net.  Or the funds can be used when needed to supplement retirement income.  The options are endless.

How is the amount on a line of credit determined?

Just like all reverse mortgages, the amount is determined based on the age of the borrower (borrowers must be age 62 or older) and the appraised value of the home.  The older the borrower and the more the home is worth, the larger the line of credit will initially be.  Borrowers also are not required to use all the available equity in their home as the line of credit, and they have options to combine it with other funding sources such as monthly installments or even a home purchase.

Will the line of credit funding amount ever change?  

Yes and no.  Unlike other reverse mortgage funding options, a line of credit will increase at a compounding rate determine by HUD – and on the flip side, it will never decrease even if home values depreciate.

Why get a Line of Credit now rather than wait until I’m sure I need it?  

Retirement experts are recommending to many clients to include the reverse mortgage line of credit in their retirement portfolios from the get-go for various reasons.  One, the housing market is strong right now and appraised home values are high.  Two, as the years go on, these programs change and it may not be available in 10 years, but anyone who has an already established line of credit will always be ‘grandfathered’ into the program, even if it is eliminated in the future.  And three, in the case of economic downturn where investments are affected, having the line of credit immediately available can be a future safety net.

Is a Reverse Mortgage Line of Credit FHA Insured?

Typically yes, as long you are working with a reputable reverse mortgage lender, the line of credit will beFHA insured just like any other reverse mortgage product.  This means there are protections and guarantees in place for the borrower that will never falter.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

Managing Debt Burden with Reverse Mortgage as HELOC Loans Reset

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonAt the peak of the housing boom in 2005/2006, many people took out HELOC (Home Equity Line of Credit) loans that allowed interest only payments for 10 years. But after that 10 year term is up, everything changes as principal is now added to the interest payments.  Then to add insult to injury, many people are only vaguely aware of what this means.  They had assumed the equity in their home would continue to grow and planned to sell before this loan was even due, along with various other scenarios based on the assumption the housing market would remain strong.  But as we all know, in 2008 everything changed.

Between December 2014 and March 2015, the default rate on HELOC loans jumped from 0.5% to 1.9% – potentially tripling the HELOC loans in trouble.  Another large amount of loans have reset in 2016, leaving many unprepared homeowners with new debt.  For senior homeowners, a reverse mortgage can help.

To obtain a reverse mortgage the borrower(s) must be aged 62 and over, live in their primary residence they’ll be wanting to loan on, and have at least some equity in the home.  They CAN have a mortgage or a HELOC on the home, and still be able to get a reverse mortgage.  Some of the funds would need to be used to take care of these existing loans – but once that is done, the borrower will have access to the remaining funds to use as they see fit and they will always live mortgage and loan payment free.

Here’s a how a Reverse Mortgage can help with a HELOC:

Scenario 1 – Homeowner has existing HELOC that has reset to include principal as well as interest.  Because the HELOC was obtained 10 years ago, before retirement, income has drastically changed and the borrowers are now living on a much tighter budget – that did not include this reset.  

Solution 1 – By exploring the reverse mortgage idea, the homeowner finds they can completely eliminate the HELOC and convert the additional equity in the home into cash via a reverse mortgage line of credit or monthly installments – all while living loan and mortgage payment free.

Scenario 2 – Homeowner has a HELOC that is about to reset on a vacation home, while their primary residence is nearly paid off.  

Solution 2 – By obtaining a reverse mortgage on their primary residence, they have the liquid funds available to pay off the HELOC on the second home without acquiring a payment on the primary home.  And by using a reverse mortgage line of credit, they have created a nest egg for use now or in the future.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

Reverse Mortgage Terms to Know – Part 4

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonThe preceding “Terms to Know” articles have laid a firm foundation for your understanding the reverse mortgage world lingo, but this final installment of this series will go over a number of terms commonly used to describe the process.

Origination refers to the entire process of preparing the documents and setting up the mortgage. It will include an Appraisal. The Appraisal is the estimate of a house’s market value, or how much it would sell for if put on the market. The terms Appreciation and Depreciation mean what they sound like, that is, the increase or decrease of the value of a home at the time an assessment is done.

Condemnation is unlikely to come into your inquiry around a reverse mortgage for your home, however it is often in the appraisal field of terms. Condemnation is either the government taking private property for public use implying right of the eminent domain or it is a court action saying a property is unfit for use.

The Home Value Limit denotes the largest value in the reverse mortgage program of the home that can be used to decide what the loan advances to the borrower could be. A TALC rate means Total Annual Loan Cost.  It is an annual percentage cost of a reverse mortgage. Unlike the Annual Percentage Rate (APR), which takes into account only the finance charges, the TALC rate considers all costs.

If all goes well, the Origination goes into the Closing.  The Closing is a meeting to seal the deal. All the documents are signed and the mortgage begins at this moment. Even though the mortgage begins upon signing there is a Right of Rescission to protect the borrower. It gives them the right to cancel the home loan so long as it is within three business days of the closing.

Servicing happens after the closing. It is the administration of everything about the loan and includes the keeping of loan records and the sending of statements.

The following articles are also available within this blog – Terms to Know – Part 1, Terms to Know – Part 2, Terms to Know – Part 3, and Terms to Know – Interest Rates.

Reverse mortgages are available to seniors 62 and over, including married couples.  The funds can be accessed in a variety of ways including monthly installments, a line of credit, a lump sum, and to purchase a home.  Homeowners with a reverse mortgage will be able to stay in the home as long as they desire and the will NEVER have a loan payment until the last borrower permanently leaves the residence.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

Reverse Mortgage Terms to Know – Part 3

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonPretty soon you will find yourself versed in the language of reverse mortgage. There are a number of reasons this will be helpful. First of all, you can read information on your own and understand the basic meaning. Second, you will be able to understand what your counselor has to share with you as the outline and give the valuable consulting time to deeper questions. And third, you can protect yourself from scams and those who would try to use terminology that could mislead you.  This final installment of “Terms to Know” focuses on terms you may run across when applying for and finalizing the loan.  As with any contract, it’s important to read and understand what is in it.  I hope this will help.  You can find the previous installments to this series by clicking here for “Terms to Know – Part 1” or click here for “Terms to know – Part 2” and here for “Terms to Know – Interest Rates“.

There are a few different kinds of advances to know. The first would be a Loan Advance which simply means the payment to the borrower or their designated party, it is an umbrella term under which the other advances fall. Another would be a Fixed Monthly Loan Advance which is exactly what is sounds like, the payment made monthly that remains the same to the borrower. A Term Advance is the same as a Fixed Monthly Loan Advance except that it is for a period of time and not the length of the loan. The last is a Tenure Advance which is a fixed monthly loan advance for the duration of time the borrower is living in the home.

If you receive the entire loan at closing this is called a Lump Sum. Sometimes a Lump Sum comes from a DPL, or Deferred Payment Loan. This type of loan gives you cash for home repair or maintenance and is usually offered on the local or state government level. From time to time the government may take hold of property for community use, such as building a needed highway, the right to do this is called Eminent Domain. A Credit Line is another way to employ a reverse mortgage for your needs. It is an account that lets the borrower decide how much and when they would like to take money. Line of Credit is another term for the same credit account.

Two terms common to the end of a reverse mortgage and the beginning of repayment are Loan Balance and Leftover Equity. The Loan Balance is the amount owed. It is capped in a reverse mortgage by the value of the home at the time the loan is repaid and will be the sum of principal and interest. If you take the sale price of the home and subtract out the cost of selling it and the amount owed you will get the Leftover Equity. This is what either the homeowner or the heirs will receive.

Reverse mortgages are available to seniors 62 and over, including married couples.  The funds can be accessed in a variety of ways including monthly installments, a line of credit, a lump sum, and to purchase a home.  Homeowners with a reverse mortgage will be able to stay in the home as long as they desire and the will NEVER have a loan payment until the last borrower permanently leaves the residence.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

 

Reverse Mortgage Terms to Know – Part 2

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonIn continuing my series of “Terms to Know”, this third installment goes over some very common acronyms used in the reverse mortgage industry.  Understanding what these mean can help with understanding on a more detailed level when doing research or speaking with a specialist, as well as when applying for or finalizing the loan.   You can find “Terms to Know- Part 1” of this series here, and “Terms to Know – Interest Rates”, by clicking here.

There are a few notable agencies involved in the federally created reverse mortgage system. These are HUD, FHA, and AAA. All are designed to help the one seeking a reverse mortgage understand the process and proceed safely. Like any product where the lender is receiving advantage alongside the borrower, it is good to be cautioned about scams. The best route when considering a reverse mortgage is to always work with a reputable reverse mortgage specialist.

The HUD is the U.S. Department of Housing and Urban Development. They not only instituted the reverse mortgage (aka HECM – Home Equity Conversion Mortgage) program, but also provide solid third party counselors to help you sift through the options and make sure all questions are answered. The FHA is the Federal Housing Administration. It is the part of the HUD that insures reverse mortgages.

The AAA stands for Area Agency for Aging. This organization provides information and resources for aging adults. They can be found as non-profit agencies right in your town or region. Not only can you find information about the variety of reverse mortgage options but many other resources available to senior citizens.

A reverse mortgage can be called both HECM and Reverse Mortgage, but they are the same thing, the terms are interchangeable.   They are also often referred to as Federally Insured or FHA Insured Reverse Mortgages.  Another term you may run across is Model Specifications; these are recommended rules for both analyzing and comparing reverse mortgages.

Reverse mortgages are available to seniors 62 and over, including married couples.  The funds can be accessed in a variety of ways including monthly installments, a line of credit, a lump sum, and to purchase a home.  Homeowners with a reverse mortgage will be able to stay in the home as long as they desire and they will NEVER have a loan payment until the last borrower permanently leaves the residence.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.