Reverse Mortgage Info – Page 6 – Seattle Reverse Mortgage Specialist

Reverse Mortgage Terms to Know – Interest Rates

Posted on March 18, 2016March 25, 2016 by Janis Layman

Continuing 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 March 9, 2016March 15, 2016 by Janis Layman

If 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.

Cash Home Buyers Get a Boost with Reverse Mortgage for Purchase

Posted on March 1, 2016March 4, 2016 by Janis Layman

In this day and age, buying a home with cash is rare. And not because of the reasons you may think – such as who has that much cash nowadays? Well, that is part of the reason, but it’s a little more complicated than that. Those who have a substantial amount of cash are finding there are no homes available in their price range and suddenly they don’t have enough cash to be a true “cash buyer”. This diminishes their hopes of living mortgage payment free. For example, if a retired couple sells their home or allots other funds amounting to $200,000 for a new home, they will suddenly be facing a new dilemma – finding a home to meet their needs, that doesn’t need repairs, and is in the community they wish to live – and that is within that price range. With home prices quickly rebounding across the Seattle, Washington area, this scenario is playing out often. The alternative is assumed to be either A) settle for less than what is desired in a home, or B) use the cash as a down payment and take out a conventional mortgage giving up the hope of not having a mortgage payment. But there is another option…

This is where the Reverse Mortgage for Purchase program can provide a solution. Not only will the program add funds to the buyer’s available cash making up the difference needed to purchase an appropriate home, it will also allow that buyer to live mortgage payment free.

Here’s how it works:

For seniors 62 and over, home buyers are able to use a reverse mortgage to purchase a new home. The amount of the down payment required from the buyer will depend on the amount of the home they are purchasing. But unlike a conventional loan, not only will the lender provide the funds to make up the difference between the home price and the down payment, the new home owners will also be able to live mortgage payment free for as long as they remain in the home, freeing up income for other things – such as medical bills, in home care, or even vacations.

With options like this available to seniors, there is no reason realtors shouldn’t be suggesting their clients look into this opportunity. It’s not right for everyone – but it’s a win-win for many!

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.

Understanding Elder Law

Posted on February 22, 2016 by Janis Layman

Elder law is a relatively unknown segment of law and is often overlooked when seeking legal solutions. But for some seniors and their families in the Seattle, Washington area, 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. It is highly encouraged to make sure any question receives an adequate answer – 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.

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 February 17, 2016February 22, 2016 by Janis Layman

For 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.

Taking a Look at Senior Identity Theft in Seattle, WA

Posted on January 20, 2016January 29, 2016 by Janis Layman

Identity theft is a serious problem, especially among seniors in the Seattle, Washington area who can be easy targets. There are ways to protect yourself and measures you can take to ensure you or someone you love is not a victim. Let’s start with the basics…

What is Identity Theft?

According to the 1998 Identity Theft and Assumption Deterrence Act identity theft is when someone“knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, any unlawful activity that constitutes a violation of federal law, or that constitutes a felony under any applicable state or local law.”

Types of Identity Theft

• Financial identity theft

This involves using another’s identity to obtain credit, product or services. Improtant financial information can often be obtained via internet scams or telephone scams.

• Identity cloning

When someone assumed the identity of another person and uses it in daily life.

• Medical identity theft

This is similar to identity cloning, except it is only used to obtain medical care or drugs.

How Does Identity Theft Happen?

In today’s technology driven society, protecting your identity is more important than ever. It happens everyone, some you can avoid by taking the right precautions, and others you can’t do anything about. In recent years hackers have managed to obtain and use tens of thousands of credit card information by finding and exploiting security holes in the credit card companies. This is an example of identity theft that can not be avoided by the consumer.

“Phishing” emails and text messages are one of the most common ways to obtain private identity information. This is where you receive an email or text message that appears to come from a financial institution, such as your bank or PayPal. These often appear urgent, so you follow the link to sign in – but the catch is you’re actually on a fake website and you’ve just given a scammer access to your private information. But, don’t assume identity theft only happens online. Similar scams happen via telephone calls, where it is supposedly the IRS contacting you about a small outstanding balance, and before you know it you’ve handed over your credit card number and all the relevant information. Identity theft can happen anywhere, anytime. Someone could be watching over your shoulder as you fill out a form at your doctor’s office. Another individual could be rummaging through your trash, hoping to find a tossed out credit card offer. There are many ways to fall victim to identity theft, arming yourself with facts and prevention is key to protection. You can NEVER be too careful.

How do I protect myself from Identity Theft?

• Be aware of your surroundings. When filling out forms that include private information, take a seat away from others when possible. Never throw out forms or paperwork that may have your personal information on them, always take these home with you and dispose of them properly.

• Don’t toss out credit card offers or other junk mail that pertains to obtaining credit. In addition, any other private information you have – bills, car registration, insurance documents, bank statements – should always be disposed of properly and NEVER put out with your household trash. These items should be shredded or burned. In addition, limiting the amount of junk mail you receive by “opting out” of mail distribution lists can vastly decrease your risk. Opt out by calling 1-888-5-OPTOUT.

• Never follow links to bank accounts, credit accounts, PayPal accounts, etc from an email. Again, “phishing” emails may appear as a completely legitimate email from your bank or credit card company, warning you of unauthorized transactions or other alarming information. ALWAYS access your bank and credit accounts by entering their web address into your web browser, NEVER through a link. Reputable companies will not contact you via email about such important matters.

• Don’t respond to emails offering money in exchange for “helping” an individual transfer money into the country. These are always scams and have proven to be very dangerous.

• Password protect your computer and your wireless internet. Use firewalls and virus protection software.

• Never give personal information to telephone solicitors or door to door solicitors. Do not give out personal information over the phone unless you placed the call yourself.

• Lock your car. Identity theft via “glove compartment” information is on the rise. Keeping your car locked can ensure you are not an easy target.

• Don’t carry your Social Security card in your wallet or purse. Purge expired credit cards, insurance cards, and ID’s regularly. Keep these items at home in a safe place.

If you do not have a locking mailbox, do not mail payments using your mailbox. Always take the mail directly to the post office.

What do I do if think I’ve been targeted?

Contact the Federal Trade Commission at 1-877-IDTHEFT or www.ftc.gov

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 January 13, 2016January 20, 2016 by Janis Layman

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 (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 January 5, 2016January 11, 2016 by Janis Layman

It’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 December 28, 2015 by Janis Layman

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.

Reverse Mortgage FAQ – Part 2

Posted on December 18, 2015December 28, 2015 by Janis Layman

This is the second in a three part series of frequently asked questions about Reverse Mortgage. You can find Part 1 here and Part 3 here. If you have questions that are not currently listed, please don’t hesitate to contact me directly.

Can I get a Reverse Mortgage even if I have an existing mortgage?

You may qualify for a reverse mortgage even if you still owe money on an existing mortgage. The existing loan will be paid off first with the reverse mortgage funds, then the remainder of the funds will be given to you. This scenario would apply as long as the amount of the reverse mortgage is larger than the existing loan. For example: if you owe $100,000 on an existing mortgage and you qualify for $125,000 under the reverse mortgage program, under these circumstances you would still have $25,000 left over to do with as you wish AND you would no longer have a mortgage payment.

Another scenario would be one where the mortgage on your house is more than what you qualified for under the reverse mortgage program. In this situation you would have the option to make up the difference with your own funds between the amount of reverse mortgage you qualified for and the existing loan. This would allow you to no longer have the burden of a monthly mortgage payment. Working with a reputable reverse mortgage lender will ensure the most accurate information regarding how an existing mortgage would affect a reverse mortgage and what will be right for you.

What is Reverse Mortgage Counseling?

Prior to being approved for a reverse mortgage, HUD’s Federal Housing Administration (FHA) requires each borrower to participate in a counseling session with an approved agency. These not-for-profit agencies are funded by the federal government and work closely with both the FHA and lenders to ensure a smooth process. The goal of this session is not to steer a potential borrower in one direction or another, but to make sure they clearly understand all aspects of a reverse mortgage. Read more about what to expect during reverse mortgage counseling here.

Why not get a home equity loan instead of a reverse mortgage?

Reverse mortgages do not need to be repaid as long as you remain in your home. This allows for a lot of flexibility if you are on a tight or limited budget, or would like to use your funds from a reverse mortgage for specific purposes such as retirement income.

On the other hand, attaining a home equity loan (or a second mortgage) requires you have sufficient income to cover the debt—plus, you must continue to make monthly payments on both any existing mortgage and the new home equity loan. With a reverse mortgage, you do not make monthly mortgage payments and the federally insured loan protects you from foreclosure.

Do I have to pay taxes on the cash payments I receive?

The cash you receive from a reverse mortgage is not subject to individual income taxation. But, since you hold the title to your home, you are still responsible for property taxes, insurance, utilities, maintenance, and other home-related expenses. Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole. Find a whole lot more information about what reverse mortgage holders are still responsible for after obtaining the loan here.

Who is a Reverse Mortgage not right for?

Reverse mortgages are not right for everyone, which makes it even more important that you work with a reputable lender. A reverse mortgage may not be in your best interest if you intend to leave your home within 2-3 years, if you own multiple homes or investment property, or if you intend to leave your spouse off the loan. Even if you fall into any of these categories, discuss your situation with a lender before eliminating reverse mortgage as an 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.