Are You Prepared If Your Spouse Dies?

Posted on by Janis Layman

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

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

Here are some suggestions to putting this information in order:

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

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

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

What to include on your list:

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

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

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

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

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

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

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonOne 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.

Should a Reverse Mortgage be Part of Your Retirement Portfolio?

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonFor the past quarter century seniors have easily managed to retire on three things: company pension plans, social security, and personal savings.  But with an always uncertain economy facing us today and in the future, many baby boomers are taking a second look at their retirement portfolios.  Previously, tapping into home equity for retirement has been considered a last resort.  But should it be?

Both company pensions and social security benefits face much uncertainty down the road, and if you’re lucky enough to have a somewhat stable retirement investments, protecting them will be high priority.  When adding home equity into the retirement equation, statistics show most baby boomers 51 and over have enough to retire comfortably.  So where does this leave reverse mortgages?

For seniors 62 and over reverse mortgage is a feasible 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.

When looking down the road toward financial planning for retirement, ask yourself a few questions and determine if a reverse mortgage might fit into your Plan A or your Plan B.  Discuss it with your spouse and with your financial planner.  Learn the facts about reverse mortgage and how it will affect your loved ones after you pass.

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.

 

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.

 

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.