Curing HELOC Debt With Reverse Mortgage

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonA HELOC is the acronym for Home Equity Line of Credit, and thousands in the Seattle area have taken advantage of it. When the housing boom was in full swing a number of years ago, the values of personal homes gave their owners a strong resource to draw upon in the form of a loan.  Unfortunately many of these loans amortized, leaving the borrowers with higher than predicted payments and long term loans.

Seniors 62 or older with a HELOC loan may be able to utilize a reverse mortgage to relieve the financial burden.  The HECM, or Reverse Mortgage, provides the borrower with non-taxable income that will not affect social security or Medicare, and can be used for whatever the borrower sees fit. The funds from the loan can also be received in various options such as monthly payments or line of credit. Seeking the advice of a reputable reverse mortgage lender can help you make these decisions.  During the application process, the HELOC will be discussed and a options of paying it off will be laid out.

If you do not presently have a HELOC but are considering one, put reverse mortgage on the table for a consideration as well. There will be advantages to both options giving you a sense of freedom to have choices.

Reverse mortgages are available to seniors from all walks of life, including married couples, and they will incur NO mortgage or loan payments.  The amount of funds a borrower can receive is based primarily on two things – the amount of equity in the home and the age of the borrower.  Although these are technically loans, they do not need to be paid back until the last borrower leaves the home permanently, at which time there are various 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.

 

Taking a Look at Senior Identity Theft in Seattle, WA

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonIdentity 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 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.