Using a Reverse Mortgage to Fulfill Retirement Dreams in Seattle, WA

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonI recently ran across a hard hitting article titled “Do I Have to Die Early to Avoid Poverty?”.  What a powerful title.  But the truth is, I meet people everyday who are forced to ask this questions of themselves.  Our whole lives, we work hard, raise a family, save for retirement, hope we’re blessed enough to watch our grandchildren and even our great-grandchildren grow – but then for many, as we age, the thought of funds running out before we die becomes a looming worry.  Often, regardless of strategic retirement planning, the elderly live on a strict budget with monthly allotments of funds and will have calculated that based on the age they will likely pass away.  But what if they are lucky enough to live beyond these projections?

Using reverse mortgage as a retirement planning tool can make a world of difference for those wishing to live fulfilling lives and not face the scenario described above.  Sometimes this looks as simple as supplementing income to make sure everyone is comfortable throughout the golden years.  Other times it means drawing from reverse mortgage in a lump sum with the desire to spend it on family while the borrower is still alive and can reap the personal rewards, instead of waiting until after they’ve passed to distribute inheritance.  Other times it can be a line of credit or monthly installments to prevent savings and retirement funds from running out.

Reverse mortgage is available to homeowners (single, widowed, or married) 62 and over.  Funds can be used for any purpose the borrower sees fit.  Reverse mortgages are more frequently being utilized as a retirement or financial planning tool as planners are working with reputable lenders to ensure their clients are fully informed of their options.

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.

How Reverse Mortgage Works in Seattle, WA

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonThe beautiful areas surrounding Seattle, Washington are home to many retirees and seniors.  Year after year, this area makes news as one of the best places in the nation to retire.  Elderly adults stay active, family loves to come visit, and with so much to do, it’s hard to ever want to leave!

Now, imagine living in your home mortgage free, and enjoying monthly proceeds for life, both scenarios benefiting from the years you’ve invested in your home. A reverse mortgage is a unique tool designed for seniors 62 and older. You enjoy access to part of the equity in your home and the freedom and comfort of the home you’ve known for so many years. It’s your home, now you can put it to work for you.

Reverse mortgage borrowers retain ownership and title to their home. It’s yours just as it was before, but now you can benefit from the equity that’s been building in your home for years. In addition, HECM reverse mortgage loans give you the peace of mind of a government guaranteed FHA backed loan where you will never owe more than the home is worth. You can get a reverse mortgage on your primary residence and no repayment is due until the last borrower passes away or permanently leaves the home.

As a protection, all those seeking a reverse mortgage are required to obtain HUD counseling (from an independent third party) prior to incurring any costs associated with the loan. While proceeds from a reverse mortgage are not subject to personal income taxation, borrowers should seek tax advice on how proceeds may affect government needs-based programs such as Medicaid and Food Stamps.

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 Mortgages Helping the Eldery Age at Home

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonAs traditional forms of elder care continue to be overshadowed by numerous other options, reverse mortgage is often helping senior individuals stay in their homes while they age.  Since reverse mortgages can open up opportunity to turn home equity into liquid cash, without having to move or make a mortgage loan payment, seniors and their families are using this opportunity to pay for care that would otherwise not be covered by basic Medicare or health insurance.

Traditionally, “long term” elder care takes place in a nursing home or assisted living facility.  Medicare or Medicaid will often cover these expenses. but there is little public assistance for “in-home care”, although it varies from state to state.  As economic woes lend to retirement fears, reverse mortgage is more commonly being utilized for what it can do best, provide security for those most in need and offer a longer-term lifeline without disrupting the lives of the recipients.

Studies have shown that the benefits of aging in place can be enormous for the right candidate.  Not only can a move be both emotionally and physically challenging on a senior, especially one with medical concerns, it’s known that the quality of life tends to increase when seniors maintain their independence and their community ties.  Benefits include:

  • Comfort.  We all know the saying “There’s no place like home”, but this is often especially true when a senior has lived in a home for years or has lost a spouse.  Uprooting from such familiarity can have drastic affects.
  • Community Ties.  More often seniors are developing strong community ties well into their retirement years.  Family and friends are wonderful for grounding an aging loved one.
  • Independence. Remaining independent keeps seniors healthier than ever realized before.  It also allows them to continue doing many of the things they have always done and enjoyed.
  • Mentality. Our home life strongly impacts how we feel mentally. If a senior stays home to age they are likely to feel much better and happier than one that has been put into a nursing home or assisted care facility.

A reverse mortgage can help seniors 62 and over tap into their home equity and allow their home to work for them.

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.

Is In-Home Senior Care Right For You?

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonIn today’s fast-paced society, seniors are more independent than ever before.  Many develop strong community ties, visit with nearby family frequently and even open their homes to out-of-state family, embrace a close circle of friends, and through options such as reverse mortgage, are able to stay in their homes comfortably for far longer than ever before.  But what happens when living at home alone becomes a concern for these seniors and/or their adult children?  In the past, it typically meant one of two things: move-in with family or move to a senior care facility.  Often times though, a move like this can be detrimental in itself.  In-home senior care may be all that is needed to alleviate concerns and keep everyone happy.

What is In-Home Senior Care?

In-Home Senior Care is an option where a caregiver visits the home during scheduled days/hours in order to attend to specific needs.  This offers peace of mind to both the family and the senior.  It also helps seniors continue to lead an independent lifestyle while still receiving the assistance needed, without burdening busy family members.  The care providers receive specialized training to ensure they are adequately equipped to care for seniors with varying needs.

What Types of Assistance Will In-Home Caregivers Offer?

The types of assistance that is offered by an in-home caregiver will vary based on both the needs and the care company, but most often include:

  • Safety supervision
  • Socialization
  • Transportation
  • Light housekeeping
  • Grocery shopping
  • Cooking
  • Running errands
  • Medication reminders
  • Walking assistance
  • Helping get dressed
  • Stand-by bathing/showering assistance
  • Grooming
  • Reading aloud from books, newspapers and magazines
  • Range of motion exercises
  • and lots more

Serving as a family caregiver for an aging loved one often is rewarding, yet involves sacrifice and stress.  It also frequently takes a financial toll on the caregiver with an estimated $5,500/year spent on out of pockets expenses, not to mention lost wages due to missed work.  Considering working with an in-home caregiver may be a better option all around.

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 – Interest Rates

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonContinuing our tour of the Reverse Mortgage terminology there are a few INTEREST related phrases that are good to know.  Although all these phrases may not come up for everyone, if you’re shopping around or learning more about the process, you may run across a few of them.

The CMT Rate is the Constant Maturity Treasury Rate and is used as an interest rate index in the HECM program; while the Maturity is when the loan is due and payable. An Acceleration Clause refers to this point by stating in the contract when a loan may be considered due and payable.

There are quite a few words used to talk about interest such as adjustable and current and expected. All of them refer to something a little bit different. If you choose a reverse mortgage with an Adjustable Rate, that would mean it would change based on the published market rate index. A Cap would be the limit on how much an adjustable rate is allowed to go up or down during a defined period of time.

An Initial Interest Rate (in the HECM program,) is the rate used to determine your loan advance amounts. It will equal one of two things, either a ten year LIBOR rate with a margin or a ten year CMT, Constant Maturity Rate. The LIBOR is the London Interbank Offered Rate and is often used as an index for interest in the HECM program.

Your Current Interest Rate in the HECM program is self descriptive. It refers to the rate of interest currently being charged on the loan.

The last significant term relating to interest is the Expected Interest Rate. This rate equals one of two things. It is either a 10-year CMT or a 10-year LIBOR and is used to determine a borrower’s loan advance amounts. To help determine the Initial, Current and Expected Interest Rates a Margin is added, this is a defined amount.

Seniors 62 and over may be eligible for a reverse mortgage or a reverse mortgage for purchase by utilizing the equity many already have in their homes. Funds can be accessed in different ways including a monthly installment or a line of credit.  The homeowner will always retain the title to the home and will live mortgage payment free, and it’s common misconception is that the home will be lost after you pass. With proper education via required third party counseling and retirement planning, this does not need to be the case.

If you have any questions about any of these terms, please don’t hesitate to contact me.

Reverse Mortgage Terms to Know – Part 1

Posted on by Janis Layman

 

 

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonIf you’re considering a reverse mortgage, you’ve likely read a handful of short articles on them, or Home Equity Conversion Mortgage (HECM).  You probably have a sense of what a reverse mortgage is and what it is not. So you read longer more detailed articles and meet with a lender, only to find yourself in a sea of words that leave you swirling. Like any type of contractual agreement in America, reverse mortgage has its own language to give clear definition to the acting agencies, the building blocks involved and the rights and responsibilities of all parties involved.

The following will help you speak the reverse mortgage language, starting with the basic overarching terms.

A Reverse Mortgage is a loan taken in lieu of home equity. It gives cash advances to the borrower and does not require repayment until the last borrower passes away or leaves the home permanently. The loan repayment amount is capped by the value of the home at the time of loan maturity.  The acronym HECM means Home Equity Conversion Mortgage and is the only program of its kind backed and insured by the Federal Housing Administration.

A Mortgage refers to a legal document. The document makes a home available to a lender to repay a debt. A Non-Recourse Reverse Mortgage is a home loan where the amount owed cannot exceed the home’s value at the time of loan repayment. This type of reverse mortgage is FHA insured. Another type of reverse mortgage is called a Proprietary Reverse Mortgage, which have grown quite uncommon.  Proprietary reverse mortgages are privately insured by the banks and mortgage companies that offer them. They are not subject to all the same regulations as HECMs, and for this reason borrowers should ensure they understand these loans thoroughly and beware of scams.  They are also occasionally called “jumbo” reverse mortgages.

The value of a home, which implies subtracting out any money owed on it, is called Home Equity and Home Equity Conversion is the process of turning the equity into cash. It allows the one receiving to stay in their home without making monthly payments while there, or still alive. It takes what is due to the borrower wrapped up in the years of paying for their home and makes it available immediately.

For seniors 62 and older a reverse mortgage is an option.  Utilizing the equity of the asset you already have can help fund the retirement of your dreams – or just your retirement. You will always retain the title to your home and will live mortgage payment free. How you decide to use this asset is up to you, and a common misconception is that your home will be lost after you pass. With proper education via required third party counseling and retirement planning, this does not need to be the case.

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.

 

The Reverse Mortgage Appraisal

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonFor seniors 62 and over who are considering a reverse mortgage, part of what determines the amount of funds available is the appraised value of the home.  Typically, once your reverse mortgage lender has received your application, the lender will contact an FHA appraiser.  The appraiser will then contact you to schedule a time that works for them to visit your home. Here is what to expect from a reverse mortgage home appraisal:

The Inspection:

During the inspection, the appraiser will walk through your home with you.  It is not uncommon for the appraiser to take photographs of your home, primarily if there are specific features that may add to the value of the home or may be in need of repair.

The Research:

The appraiser will then begin to research various factors that will come into play, such as comparable home sales in your area.  The appraiser will review public records, multiple listing services, tax assessor’s records, and any other resources available to determine factors that will influence the value of your home.

The Appraisal Report:

After analyzing your home along with comparable home sales in your area, the appraiser will deliver the appraisal to be used with your loan request.  The report will contain all the information about your home, the comparable home sales that the appraiser used, and any photographs of your home.

Once the appraisal is completed your reverse mortgage lender will provide you with a copy of your report and update your reverse mortgage figures based on the appraised value.

There are some simple things that can be done BEFORE the appraiser arrives that can affect your value and prevent repeated visits by the appraiser.

For example, look for and repair the following if possible:

  • Do you have any chipping or peeling paint inside or outside the home?
  • Do you have any exposed electrical wires?
  • Do you have any current or past water leaks that have not been treated?
  • Do you have any decks or staircases without hand rails?
  • Does your roof have any issues with leaking or dose it show excessive wear?

If home repairs are required for a reverse mortgage, they can sometimes be completed after closing on the loan, using the proceeds from the reverse mortgage, thus eliminating the outgoing cost for seniors.  Ask your reverse mortgage lender for more information about this option.

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.

How are Social Security, Medicare, and Pensions Affected by a Reverse Mortgage?

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonA 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 (married or single) 62 and older as long as their is adequate equity in the home, it is the primary residence, and it is a HUD approved property type.   The proceeds can be received as monthly installments, a reverse line of credit, a lump sum, or to purchase a new residence – and can be used for any purpose the borrower sees fit.  This FHA insured loan allows the borrower(s) to live mortgage payment free.

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 Funds From Reverse Mortgages Taxable?

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonIt’s the New Year!  This means new possibilities and new opportunities are abound!  But it also means it’s time to get business in order in preparation for tax season.  It’s common during this time of year for me to receive many questions regarding taxes and reverse mortgage– from both those considering a reverse mortgage, and those who already have a reverse mortgage.

Here are the two most common questions I get:

Are the funds from my reverse mortgage considered “taxable income”? 

No.  This can often be a huge benefit of a reverse mortgage – the funds received are NOT taxable, meaning they do not count as income.  This can be a positive compared to other types of retirement income, including various investments, some of which are taxable.  Because the funds received from a reverse mortgage are technically an advance on a loan, any payments or lump sums received are not taxable income and do not need to be reported on a tax return.  They also typically do not affect Social Security or Medicare payments.

Is the interest from my loan deductible? 

No.  Because reverse mortgage holders do not make monthly mortgage payments and typically the interest is not paid until the loan is paid in full, the interest from a reverse mortgage loan is not deductible on a tax return.  This is also the case with a reverse mortgage for purchase loan.

FHA insured reverse mortgages are available to homeowners 62 and older in the Seattle, Washington and surrounding areas.   These loans allow the borrower to live mortgage payment free and receive their loan payment in monthly installments, a line of credit, a lump sum, and even as a tool to purchase a new home.  All borrowers are required to participate in third party counseling to ensure all their questions are adequately answered before making a decision.

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 FAQ – Part 3

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline Washington

 

This is the third in a three part series of frequently asked questions about Reverse Mortgage.  You can find Part 1 here and Part 2 here.  If you have questions that are not currently listed, please don’t hesitate to contact me directly.

Will I Lose My Government Assistance If I Get a Reverse Mortgage?

Because a reverse mortgage is not considered income, it does not affect regular Social Security or Medicare benefits. However, if you are on Medicaid or other public assistance, any reverse mortgage proceeds that you receive may affect your eligibility. Reverse mortgage funds that you retain would be considered an asset, just as other bank funds.  Working with a reputable reverse mortgage lender will ensure you are properly reporting income and not caught by surprise.

What is a Reverse Mortgage Appraisal?

A home appraisal by an FHA approved appraiser is required for every reverse mortgage loan.  Once your reverse mortgage lender has received your application, you will be contacted by an appraiser to schedule a time to conduct the appraisal.  The appraisal will consist of an inspection, where the appraiser will walk through your home and possibly take photographs.  Once the walk-through is completed, research will be done to determine your home’s worth based on various factors, including comparable home sales in your area.  After the research has been done, an appraisal report will be generated which will include all of the factors that went into determining your home’s appraised value.

How Do I Spot a Reverse Mortgage Scam?

Unfortunately con-artists often prey on the elderly through reverse mortgage scams, but there are several ways to spot such activity.  Be skeptical of lenders who solicit through means such as television, door-to-door, churches and community centers, direct mailers, or other extensive advertisements.  Asking for large amounts of money up front is a very clear indicator.  Anything required beyond a routine appraisal deposit of approx $300 is cause for concern.  Steer clear of reverse mortgages that are marketed as “Foreclosure Assistance”.  A high pressure salesperson is a red-flag, as it is important to clearly understand what you are signing and to have any questions thoroughly answered.  Working with a reputable lender is critical when making such a major decision as obtaining a reverse mortgage.  Learn more about reverse mortgage scams here.

What Happens if the Borrower Moves Into a Senior Care Facility or Something Similar?

A reverse mortgage becomes due and payable when the last borrower moves out of his or her home permanently. For instance, moving into a senior care facility, selling the home, passing away or moving in with the children.  In the case of a married couple, if both spouses are on the loan as long as one spouse remains in the home the loan will continue without hiccup.

What Happens to a Reverse Mortgage After the Owners Pass?

When the homeowner passes – or the last spouse in the case of a married couple – the home will transfer into the estate or a specific person according  to the wishes expressed in the homeowner’s will.  At this time there are three main options: pay off the remainder of the loan, obtain a conventional loan, or sell the home.  For more extensive details about each of these options, read this article on my blog.

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.