Reverse Mortgage Loan: The Key to Aging at Home; With The Right Home Modifications You Can Avoid Assisted Living Placement and Age in Your Home

Gracefully Aging in Your Home with Modifications is Made Possible with a Reverse Mortgage Loan 

 

As aging in place becomes increasingly preferred among seniors, those who may have some trouble paying for necessary home modifications to make the process easier may find a possible path forward through a reverse mortgage loan. This is according to a new column appearing in Bankrate.

A majority of Americans over the age of 50 prefer to remain in their homes as they age, according to a 2018 survey conducted by AARP. Aging in place has taken on added importance in light of the COVID-19 coronavirus pandemic, as nursing homes and assisted living facilities have struggled to contain the virus. For those interested in aging in place, making certain types of home modifications can help seniors to save money, according to DeDe Jones, a certified financial planner and managing director of Innovative Financial in Lakewood, Colo.

“What not everyone considers is that you can save money by doing the right home modifications,” says Jones to Bankrate. “The longer you can safely live in your home, the less you will need to pay for assisted living care, something that is not cheap.”

Examples of the best kinds of home modifications to facilitate aging in place include adding ramps to doorways, removal of trip hazards like carpeting or molding, having the master bedroom or suite on the first floor of the home, adding a bench and/or walk-in access to a shower, ample grab bars and railings, and easy-to-grip doorknobs.

In addition to typical financing options like a home equity loan, home equity line of credit (HELOC) or a specialty home improvement loan, a reverse mortgage can present a distinct opportunity to help a senior pay for necessary home modifications that will allow them to stay in their home.

“If you’re 62 or older and own your home, you may be eligible for a reverse mortgage, which converts a portion of your equity to cash while allowing you to continue living in the home,” writes Bankrate’s Jeanne Lee. “One of the most common kinds is a Home Equity Conversion Mortgage (HECM).”

In terms of the timing of home modifications, a lot of the necessity will depend on the senior’s specific situation, Lee writes.

“Getting older is a process, so it’s likely you’ll need to adapt your home more than once as your needs change,” the column reads. “You can add home modifications gradually or all at once, if finances allow. Sometimes it’s cost-effective to add aging-in-place home modifications as part of other planned renovations, such as building an addition or remodeling a kitchen.”

Seniors should also keep in mind that new assistive technologies are being developed and released all the time, so staying on top of additional and emerging ways in which aging in place could be made easier may be beneficial.

Excerpted from Reverse Mortgage Daily

 

Shawna McDonald, Grass Valley and Nevada City Reverse Mortgage Loan Officer, for 12 years has specialized exclusively in reverse mortgage loans & has successfully completed hundreds of them, representing 11 of the LARGEST reverse mortgage lenders in the nation, including American Advisors Group, (AAG) giving you the ability to shop for great rates with one stop shopping at her office or on the phone. She is available by appointment in her downtown Grass Valley office for a no-obligation consultation OR DURING COVID she can complete your loan by phone and email. Sierra Foothills Reverse Mortgage (530) 497-3010 http://www.SierraFoothillsReverse.com  NMLS #271335 | CalDRE #00585530 Borba Investments Inc. Company NMLS 76801 |Company CalDRE # 014461

 

For Reverse Mortgages, Financial Disaster Equals A Financial Buffer

The COVID-19  pandemic has wreaked havoc on many industries indiscriminately, from energy to food service and seemingly everything in-between. While the expectation would be that the reverse mortgage industry would pivot and maneuver through this time based on its response to past crises, what’s actually happening goes beyond that: this pandemic seems to actually be helping the business.

Since mid-March, more than 44 million Americans have applied for state unemployment benefits, the largest figure in history. An additional 1.5 million people filed for benefits last week, according to the Labor Department. The stock market has been on a turbulent ride, with historic losses posted in March, many of those same losses recovered in May, and yet another steep drop being observed late last week.

These are all undoubtedly negative occurrences for American households, but they actually seem to be creating interest and — more importantly — activity for the reverse mortgage industry. Because of the economic impact of the virus and the already shaky ground on which senior retirement sits in the United States, reverse mortgage products and the professionals who offer them are finding themselves consistently busy as more Americans try and find new and novel ways to solidify their financial standings.

That initial disorientation related to the steep drops in the stock market gave way by even early April to a corps of reverse mortgage loan officers who have found ways to adapt to current economic conditions, and position the reverse mortgage as a possible solution. Loan officers in places like Colorado and Maryland  in April report that referral business had seen a noticeable spike, up to and including some partners who had gone back to the loan officers because of the new situation created by the pandemic.

Based on conversations with these loan officers, it looks like what has happened is that previous potential clients who at one point decided against getting a reverse mortgage have now seen their circumstances change. With that change in their own situation has come the realization that a reverse mortgage product is now better suited to help them through a tough time.

Regulation, and the necessity for the product

The industry’s chief governing body, namely the Federal Housing Administration (FHA) and Department of Housing and Urban Development (HUD), have also stepped up to make sure that the reverse mortgage product is available to serve people in the ways they need service. The government has allowed for relaxed appraisal requirements requirements.

This has created some additional surprise on its own: the continuous flow of regulation and intervention on the part of the government is often a cause for anxiety and difficulty on the part of the reverse mortgage industry, since compliance anxiety often results from changes handed down by the government. In this case, though, the government’s intervention has made for a much easier time for the industry, streamlining and simplifying the way that people can originate and close reverse mortgage loans.

Relevance for the reverse mortgage product category is also bolstered by the fact that major financial institutions have halted their own Home Equity Line of Credit (HELOC) offerings, starting with JP Morgan Chase in mid-April and growing to encompass Wells Fargo by May. The exits of those institutions has only strengthened the stance of reverse mortgage companies who provide stand by credit line similar to HELOC”S but with the added advantage of no monthly mortgage payment required.

These factors have led reverse mortgage industry participants have transitioned from a perspective of overriding caution to one of general optimism. In mid-April, LOs across the country found themselves very nervous about what social distancing and other virus mitigation efforts might do to their ability to conduct business with senior clientele, with a California originator advising colleagues to “prepare for the worst.”

Now, many of those same originators are finding themselves busier than they’ve ever been all year, with a favorable rate environment enhancing benefits for borrowers and added interest in proprietary products coming from the current economic situation. Many loan officers I’ve spoken with have told me — both on-the-record and off — that things like referral partnerships and loan pipelines are as large as they’ve ever been, precisely because the product is there as a tool for seniors to weather financial shocks like this one.

Fulfilling a promise

It’s not exactly a good idea for the reverse mortgage industry to market to people how it has managed to profit off of a crisis that is afflicting millions of Americans, but at the same time, the truth of the matter is that this is why reverse mortgages exist in the first place. In an environment where seniors’ retirement futures have already been put at risk by dwindling savings and disappearing pensions, the idea of the reverse mortgage is to allow a senior to use the equity in their home to either meet necessary expenses in old age, or to enhance their quality of life in retirement.

Since this crisis has had a major negative impact on both the physical and financial health of seniors, the fact that this product category is around and providing some necessary relief for those who have been adversely affected by a widespread economic downturn should be an encouraging development for the industry, since it is fulfilling both its stated purpose and promise.

Keeping up with all the dimensions of news — from new business practices to swings in industry metrics like endorsement data — that the pandemic has revealed for the industry has been dizzying. Considering how much the general tenor of conversation has changed with people at all levels from boots-on-the-ground loan officers to chief executives, it has emphasized just how resilient the industry remains, while also illuminating that for American seniors, the reverse mortgage product is well-suited to serve as a tool to solve some of their financial problems.

Of course, what the industry does with these circumstances in the end will be anyone’s guess. As of right now, though, more people are both talking about and acting on the opportunities that can be presented by the reverse mortgage product category. The relevance and even necessity for some to explore reverse mortgage options has been present throughout the crisis, and has been further highlighted because of seniors’ need for additional stability.

By Chris Clow, Reverse Mortgage Daily, edited for brevity

 

Shawna McDonald, Reverse Mortgage Loan Officer, for 12 years specializing exclusively in reverse mortgage loans & successfully completed hundreds of them. When you work with me you get the advantage of local loan representation, promptly returned phone calls and I represent 11 of the largest reverse mortgage lender in the nation guaranteeing you great rates!  I remain with an office in downtown Grass Valley but offer,   due to COVID, the service of completing loans by phone, mail, and email.  Call today for info ! Sierra Foothills Reverse Mortgage (530) 497-3010. NMLS #271335 | CalDRE #00585530 Borba Investments Inc. Company NMLS #76801 |Company CalDRE # 014461

 

During Virus Crisis Financial Planners More Receptive to Reverse Mortgages

Reverse Mortgage Loans Now Being Started and Completed by Phone from the Comfort of Your home. Call My Office Line to be Instantly Transferred to me for a Phone Consultation:  530-497-3010  Shawna McDonald, Reverse Mortgage Loan Officer, Grass Valley, Nevada City, Penn Valley

Here is a Timely Article:

During Virus Crisis  Financial Planners More Receptive to Reverse Mortgages

A survey of approximately 230 financial planners during a Mutual of Omaha Mortgage and International Retirement Resource Center webinar hosted by Dr. Wade Pfau late last week revealed that 77% of financial planner respondents are more receptive to offering reverse mortgages to their clients in light of the stock market volatility introduced by the ongoing issues of the COVID-19 coronavirus pandemic. This is according to Dr. Pfau, who shared the results of the survey with RMD.

Additionally, reverse mortgage borrowers have increased the levels of their draws from their reverse mortgage lines of credit recently, according to data shared by Celink chairman and CEO Robert Sivori during a “town hall” webinar conducted by the National Reverse Mortgage Lenders Association (NRMLA).

Reverse mortgages have often been cited by those receptive to their use in the financial planning community as viable products that can be used to avoid sequence of returns risk, where a hypothetical borrower instead chooses to draw on the reverse mortgage while their investment portfolio endures volatility due to the conditions of the stock market.

Market concerns driving receptivity

In the webinar hosted by Mutual of Omaha Mortgage with the International Retirement Resource Center, “Best Practices for Retirement Income,” many different elements related to retirement financing were discussed including the difference between the accumulation and distribution phases of retirement planning and understanding retirement risks in the current climate. The webinar was planned prior to the outbreak of the coronavirus, but had added relevance to the retirement conversation in light of the pandemic.

In regards to the response to reverse mortgages, Pfau discussed what reverse mortgages could bring to a retirement portfolio but polled his audience of financial planners about their receptivity to them well before he actually began the reverse mortgage segment of his presentation.

“The webinar covered many different topics, and we asked the question before I discussed reverse mortgages,” Pfau tells RMD. “I was a bit surprised that the number [of receptive financial planners] was so high.”

Much of this reverse mortgage receptivity is likely fueled by the anxieties currently inherent in financial markets. The market has continued to exhibit volatility even in spite of additional unprecedented action on the part of the Federal Reserve, which said it would buy as much federal government-backed debt as it needs to in order to ensure that financial markets continue to function, according to the New York Times.

The current market volatility likely creates even more concerns on the part of people who are at or near retirement in the current climate, so those who manage the assets of people in this situation are likely looking at more options to protect portfolios, Pfau says.

“I think there is a lot of concern about the impact of these market declines and the low interest rates on near retirees,” Pfau says. “And so, we are seeing more advisors being willing to consider ‘outside the box’ thinking to address these challenges.”

Additionally, Pfau’s work on reverse mortgages was also recently cited by Jeffrey Levine, CFP and director of advisor education for Kitces.com, when discussing that a reliable source of capital for a senior in times of financial stress can often be the home.

“Notably, there are a variety of ways in which homeowners may be able to unlock some of the equity in their homes,” Levine writes. “For instance, spurred on by research, including that conducted by Wade Pfau, some planners have encouraged eligible clients to secure line-of-credit style reverse mortgages on their home to help mitigate sequence-of-return risk and to avoid selling assets during significant market drops (like this one!).”

Reverse mortgage, LOC draws increase

When briefing industry professionals on patterns observed in reverse mortgage draw activity, Celink chairman and CEO Robert Sivori asked for a quick report on borrowers’ activity in drawing from their reverse mortgages, and related that there was an increase in activity of over 50%.

“Week over week, if you look at the week ending [March] 13 versus the week ending March 20, we saw a 55% increase in the number of draws, it went to 1,055 draws,” Sivori said. “From the previous week, it was 720. And then the increase in the size of the draws […] we had a 14% increase. It was 8.7 million as of last Friday. The previous week and before that, it was 4.9 million. So, [the size of the draws has almost doubled].”

Draws on reverse mortgage lines of credit have also seen notable increases, Sivori said.

“And then we also are seeing […] some line of credit draws, the standby lines of credit, where some borrowers who had no balance or very little balance, maybe just the closing costs were on there — $3,000 — that did a full draw of $615,000 on that and they’re using it the way it was intended to be used,” Sivori said. “And by the way, these numbers fit January over February, as well. So, it’s been an increasing slope here on the draws being pulled down.”

Reprint from RM Daily’s Chris Clow 3/30/2020

   Shawna McDonald, is Grass Valley’s ONLY Licensed Reverse Mortgage Specialist Loan Officer.  She has specialized solely in reverse mortgage loans for 11 years and has successfully completed hundreds of them. Approved with 10 of the largest reverse mortgage lenders in the nation, including AAG (American Advisors Group). She is available by phone appointment during our current crisis, loans can be completed remotely by phone from your home. Post crisis her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main St. Suite N, Grass Valley, by appointment only. (530) 497-3010. Her website is http://www.SierraFoothillsReverse.com. NMLS #271335 DRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 DRE# #01386892

 

Financial Planner: Reverse Mortgages Can Offer Path to Retirement ‘Paycheck’

          Financial Planner: Reverse Mortgages Can Offer Path to Retirement ‘Paycheck’

Managing finances in retirement can be difficult for a senior, most especially if someone is already strapped for cash. That makes the possibility of regular cash flow in addition to pre-existing benefit programs very attractive, and reverse mortgages can offer some seniors a viable path toward just such a path.

This is according to a new article appearing at NerdWallet written by Certified Financial Planner and author Liz Weston.

“Your expenses don’t end when your paychecks do, but creating a reliable income stream in retirement can be tricky,” Weston writes. “The right choices can result in sustainable income for the rest of your life. The wrong choices could leave you uncomfortably short of cash.”

While the first and most prominent recommendation revolves around maximizing Social Security benefits by deferring payments until age 70, finding other sources of guaranteed income can also help achieve a senior’s retirement financing goals.

“Ideally, fixed expenses in retirement would be covered by guaranteed income, such as Social Security and pensions, so that your basic lifestyle isn’t jeopardized by stock market fluctuations,” Weston writes.

Citing finance researcher Dr. Wade Pfau, two paths that could help create more guaranteed income could be an income annuity or a reverse mortgage.

“Another option could be a reverse mortgage, a loan that can convert some of your home equity into a stream of monthly checks,” she writes. “If you have a lot of equity but still have a mortgage, a reverse mortgage could pay off your loan and eliminate those monthly payments.”

Other tips to help retirees stabilize their finances in their post-working years include leaning on traditions like the “4% rule,” which financial advisors often suggest and which involves withdrawing 4% of your portfolio in the first year, before adjusting the amount for inflation each following year. Historically, this strategy has lowered the risk of depleting finances, Weston writes.

“Some planners, however, worry that 4% may be too high given current low interest rates and high stock valuations,” she adds. “The ‘Spend Safely in Retirement’ method, which [Stanford researcher Steve] Vernon created with the help of the Society of Actuaries, recommends using annual withdrawal rates based on the IRS’ required minimum distribution rules.”

Still, creating a “retirement paycheck” is often only a first step to preparing for finances in retirement. For instance, emergency funds for unexpected expenses will still need to be allocated, and retirees are also encouraged to make plans for other necessities like long-term care in the future, Weston says.

Courtesy of Liz Weston, Nerd Wallet

Shawna McDonald, Reverse Mortgages Only Loan Officer has specialized solely in reverse mortgage loans for 11 years and has successfully completed hundreds of them. Approved with 10 of the largest reverse mortgage lenders in the nation, including AAG (American Advisors Group). She is available by appointment; her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main St. Suite N, Grass Valley, (530) 497-3010. Her website is http://www.SierraFoothillsReverse.com. NMLS #271335 DRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 DRE# #01386892