Reverse Mortgage Info – Page 4 – Seattle Reverse Mortgage Specialist

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

Posted on August 24, 2016September 12, 2016 by Janis Layman

With 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 August 17, 2016September 12, 2016 by Janis Layman

At 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 August 10, 2016August 5, 2016 by Janis Layman

The 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 August 3, 2016August 18, 2016 by Janis Layman

Pretty 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.

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 July 27, 2016August 4, 2016 by Janis Layman

In 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.

How Reverse Mortgage Helps With Divorce

Posted on July 20, 2016August 4, 2016 by Janis Layman

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.

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.

5 Surprising Ways To Put a Reverse Mortgage to Work for You

Posted on July 13, 2016August 4, 2016 by Janis Layman

One of the biggest perks of a reverse mortgage is it’s up to the borrower to decide how to use the funds, as well as how to receive those funds. And with the rapidly improving reputation of today’s reverse mortgage, those uses are being suggested more often and are becoming more creative. This wonderful financial tool, available to seniors 62 and over, is now being widely accepted by financial advisors across the nation. Here’s a few reasons why…

1.) A reverse mortgage can eliminate existing housing debt. In 2010 42% of seniors age 62 and over had housing debt. This is a dramatic increase compared to the 1992 estimate which was only 24%. Housing debt can be a huge financial burden to aging Americans, whether it’s because they’re on a fixed income or because it interrupts the dreams they once had for their golden years. Using a reverse mortgage to pay off a conventional mortgage, or even a HELOC (Home Equity Line of Credit), can relieve some serious pressure in the borrower’s life, as well as adult children.

2.) A reverse mortgage line of credit can protect a retirement portfolio. During the 2008 economic crisis we all saw first hand how retirement investments are not guaranteed. But an FHA insured reverse mortgage line of credit is. Using home equity to take out a reverse mortgage line of credit now offers a second level of protection against economic pitfalls and the impact they may have on a retirement portfolio in the future. And unlike a conventional home equity line of credit, the reverse mortgage line of credit is not accompanied by a loan payment.

3. ) Age at home and fund in-home care with a reverse mortgage. One of the most common things I hear from those seeking a reverse mortgage is that they want to age at home as long as possible. Why wouldn’t they? The funds from a reverse mortgage can allow the elderly to do just that and fund the care they need if assistance becomes a need.

4.) Delay Social Security payments until the maximum benefit is available at age 70. The funds from a reverse mortgage can be used as a bridge to put off tapping into Social Security payment before they’re worth their max. Then once the Social Security is accessed, the borrower will receive funds from both.

5.) Reduce tax burden by reducing taxable income. The funds from a reverse mortgage are not considered income, meaning they are not taxed. This can be a huge benefit when other options to bring in cash include taxable incomes such as working and withdrawing from taxable retirement investments.

For seniors 62 and over reverse mortgage is an excellent option. Homeowners can access the equity in their home, live mortgage and loan payment free, and no repayment is due until the last borrower passes or permanently leaves the home at which time there are options. For some retirees, it could mean the difference between living and living well.

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.

Only 3% of Seniors Use a Reverse Mortgage to Buy A Home – But Why?

Posted on July 6, 2016August 4, 2016 by Janis Layman

A recent statistical survey showed that only 3% of senior home buyers were even considering using a reverse mortgage to the make the purchase, compared to 48% who were planning to use a conventional mortgage. But why is this?

The Reverse Mortgage for Purchase program is not new, but knowledge about it is. This program efficiently wraps the home purchase and the reverse mortgage into the same transaction allowing the home buyer to purchase the home they want AND live mortgage payment free as long as they live in it. Available to seniors 62 and older, reverse mortgages are available in various forms – a lump sum, monthly installments, a line of credit, and yes, even a home purchase. The first options are widely advertised and information about them is broad. But the last option, the home purchase option, is still relatively unheard of.

Here’s why I think this home purchasing tool is so broadly under-utilized:

• Realtors aren’t educated enough on the option, therefore they don’t suggest it. When someone is considering purchasing a new home, the realtor is often the first point of contact. If more realtors understood how this powerful program works AND how it can help their own bottom line, it would be used more frequently.

• Buyers are starting with a conventional mortgage company seeking pre-approval to determine how much they can obtain a loan for and how much the payment would be. Even if the buyer has taken this route prior to looking at homes, they should still be informed about the Reverse Mortgage for Purchase program for two very important reasons. One, it increases their purchasing power allowing the buyer to shop in a market that may be well above what a conventional mortgage would approve. And two, they will live mortgage payment free unlike is possible with a conventional mortgage.

• Cash home purchases are very enticing. For buyers considering using cash from retirement, inheritance, insurance, another home sale or asset liquidation the idea of being able to buy a home outright is gold. Again, two problems can be encountered here. One, the housing market is booming and a cash buy often results in less home, while a reverse mortgage will contribute to the cost of the home allowing for more house for less money. Two, these seniors will tie up all their cash in a home making them “home rich” but “cash poor.” The reverse mortgage purchase allows the buyer to keep a hefty chunk of their cash, or combine the home purchase with other forms of a reverse mortgage, such as a line of credit.

There will always be senior home buyers that are not a fit for the Reverse Mortgage for Purchase program, but any professional in the real estate industry is doing a disservice to not make sure their clients understand this option. For more detailed information about this program, click here. Retirement Funding Solutions often hosts detailed webinars open to all real estate professionals. If you’re interested in being informed when one is scheduled, subscribe to my e-newsletter and you will receive the notices directly from me.

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.

Can Reverse Mortgage Rescue A Looming Retirement Crisis?

Posted on June 29, 2016July 4, 2016 by Janis Layman

Numbers are being released showing that the impending retirement crisis may be worse than originally thought.

Half of Americans have less than $10,000 in savings. Nearly half of the oldest Baby Boomer generation have insufficient resources to pay for basic retirement living expenses and healthcare costs.

The Center for Retirement Research at Boston College estimates that our “retirement income deficit” is $6.6 trillion. That number represents the gap between pension and retirement savings that American households have today and what they should have to maintain their standard of living in retirement.

Over 6 million American seniors are living in poverty. This number is expected to grow by 33% by the year 2020.

These stats are concerning not only for the retirees, but also their families. A reverse mortgage can help by becoming an important piece of retirement planning. Seniors, 62 years and older now have the ability to fund or protect their retirement using the equity in their homes, alleviating mortgage payments, and receiving the funds via a line of credit, monthly payments, or at times a lump sum. In addition, a reverse mortgage can now be used to purchase a home!

For many, this option makes a world of difference, allowing for the sought after prosperous retirement years instead of barely scraping by on a budget. And the reverse mortgage funds can be used for any purpose the borrower chooses, and is often used to help with every day expenses, for long term medical costs, or to guard assets.

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.

Summer Visits Lead to Reverse Mortgage Conversations with Adult Children

Posted on June 22, 2016August 3, 2016 by Janis Layman

As summer vacation is in full swing, many of us are reflecting on our experiences visiting with family. Maybe you took your children on a camping trip or to Disneyland. Possibly you flew overseas to experience a new culture. Or maybe you took a road trip to visit your aging parents or other loved ones. If you visited with elderly family members, it likely came with mixed emotions. Every year they are a little older – and for some, every year brings just a little more worry.

This is very common after a visit. It may raise concerns about health or finances, and questions about how aging parents will continue to cope. If you’re wondering when and how you need to intervene, ask yourself these questions:

• Are they able to get around by him or herself? Are there stairs in the home?

• Is this person able to take medications without assistance? Is there a health concern that would require more regular supervision, such as Alzheimer’s or Parkinson’s?

• Is your parent able to manage mortgage payments, home-owners insurance payments, and property taxes? Is the home outdated and in need of frequent repairs – such as a furnace, roofing, electricity?

• Where is this home located? Is it in close proximity to relatives, hospitals, etc? Or is it secluded and away from town?

• Is this person lonely? Has he or she suffered the loss of a spouse? Does he or she have a solid social group or close friends?

Based on your answers to these questions, aging in place may be the right solution, and if financial strains exist surrounding the current mortgage, a reverse mortgage may be an option. Reverse mortgages allow homeowners age 62 and older to access equity in their home. The homeowner retains the title and remains in the home. With a reverse mortgage homeowners will live the remainder of their lives mortgage payment free, and can receive their funds as a monthly installment, a line of credit, or sometimes as a lump sum. Nearly all reverse mortgages are government guaranteed with FHA insurance and no repayment is due until the last borrower passes away or permanently leaves the home. At that time there are several options that include keeping the home in the family.

It is especially important to work with a reputable lender and watch out for scams if parents or loved ones are considering a reverse mortgage.

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.