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

 

Wall Street Journal: Reasons Retirees Should Consider a Reverse Mortgage

 

According to Professor Benjamin Harris, executive director of the Kellogg Public-Private Interface at Northwestern University’s Kellogg School of Management, in a column at the Wall Street Journal, retirees should strongly consider employing a reverse mortgage loan to help fund their retirements, primarily because they can serve to protect against two major problems: falling home prices, and the increasing likelihood that a senior will outlive his or her assets.

While consumers have reason to be skeptical about the ways in which such a product can help them, Harris says, there is promise in using them to overcome specific issues in retirement that should not be overlooked.

 

“Reverse mortgages are […] one of the more promising ways to protect against both falling home prices and outliving assets,” Harris writes. “And they can be a lifeline for retirees with a lot of home equity and not much else.”

Also serving as a proverbial feather in the cap for the product is the nonrecourse feature, which will prevent a senior, in the majority of cases, from owing more than the value of the home.

“This nonrecourse feature is potentially worth a lot to homeowners, especially if they use it exclusively as protection against a falling value of a home,” Harris writes. “Under [a] ‘ruthless’ strategy (as economists have dubbed it), borrowers initiate a mortgage, but don’t actually borrow any money unless the value of their home falls. This way, borrowers only pay a few thousand in up-front fees, but cash in if their home’s value falls.”

Even for those who may not find any real appeal in this kind of strategy for their own situations, the potential benefits of a reverse mortgage loan when employed correctly should not be overlooked, Harris says.

“Reverse mortgages can be a valuable way to protect against a dip in home value—which is the primary asset for many retirees,” writes Harris. “And because homeowners can stay in their homes indefinitely (as long as they maintain it and pay their taxes), reverse mortgages can be a sound way to protect against outliving your assets—a bit like buying an annuity that pays your rent every month for as long as you live.”

Caveats to consider include the ability for a lender to foreclose if tax and insurance payments are not made, while interest rates are also “probably too high given the limited risk taken by lenders,” Harris says. The loans can also be “a poor choice” if a senior hopes to leave their home to their heirs, he says. Still, they can be an attractive risk mitigation tool nonetheless when employed in the right situation.

Reprint of article from Chris Clow of Reverse Mortgage Daily and the Wall Street Journal

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, 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. The website is http://www.SierraFoothillsReverse.com. NMLS #271335 BRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 BRE# #01386892

FHA Eases Condo Rules, Expanding Reverse Mortgage Market

Through a new rule announced Wednesday, the Federal Housing Administration (FHA) is making it easier for condo owners to get reverse mortgages and other FHA financing.

The FHA published a final regulation and policy implementation guidance this week establishing a new process for condominium approvals, effective October 15, which will expand FHA financing for qualified first time homebuyers as well as seniors looking to age in place, the Department of Housing and Urban Development said in a press memo.

“Condominiums have increasingly become a source of affordable, sustainable homeownership for many families and it’s critical that FHA be there to help them,”  a HUD representative said in a press release announcing the new rule. “Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place.”

Reverse mortgage implications

This rule is being implemented partially in response to the demands of the housing market, and is aimed at including reverse mortgages for seniors who wish to age in place in a condominium unit, according to Acting HUD Deputy Secretary and FHA Commissioner Brian D. Montgomery.

“For seniors, part of our mission is to provide affordable options to age in place. Condominiums can make a lot of sense for many seniors [for reasons of affordability],” Montgomery said on a conference call with reporters. “Our single unit review now also includes reverse mortgages, known as Home Equity Conversion Mortgages (HECMs), designed to help seniors age in place.”

In a question and answer session with officials from HUD and FHA, the impact on the reverse mortgage market was additionally clarified in response to RMD.

“Due to the availability for HECM loans to be applied to the single unit approvals, I think that by introducing the single unit approval process, that’s going to provide an opportunity for all borrowers to utilize FHA financing to either acquire new homes, or if they are seniors, to age in place,” said Gisele Roget, FHA deputy assistant secretary of single family housing.

She also clarified that the previous rules governing condo approvals shut out a lot of senior condo owners from obtaining a HECM in the past, and this new rule will help to address that.

“We recognize that many seniors live in condominium projects that were unable or unwilling to go through the process of FHA’s project approval,” Roget said. “And so, by allowing HECM borrowers to utilize the single unit approval for HECMs, they will be able to age in place in condominium projects that do not have the overall FHA project approval.”

The ranges were also extensively deliberated internally by FHA, which can include HECM for Purchase transactions, added Commissioner Montgomery.

“Whether it’s HECM for Purchase or just purchasing a condo for a first-time homebuyer, we’ve spent a considerable amount of time studying the ranges,” Montgomery said. “We wanted to avoid some of the pitfalls of the housing crisis, and this is a message that we heard loud and clear. We’ve worked closely with groups out there, and obviously with our own Office of Policy Development and Research.”

Industry response

Industry participants applauded HUD’s expansion of the rules.

“Condos have become an affordable housing option for seniors, especially in high home value areas, so the FHA’s new policy has the potential to help a large group of older Americans age in place,” said Jesse Allen, EVP of alternative distribution at American Advisors Group (AAG) in an email to RMD.

Others acknowledged that this decision on condominiums has been long-requested.

“After years of working with HUD on this issue, it’s great to see them lift their ban on spot approvals,” said Scott Norman, VP field retail and director of government relations at Finance of America Reverse (FAR). “There is a great deal of demand in the condominium market, so this is very welcome news. While we are still going over the details, this announcement could help qualify tens of thousands of homeowners for reverse mortgages over the next few years and may allow more seniors the opportunity to age in place. We applaud HUD and Commissioner Montgomery for their hard work on this document.”

Some lenders also see this new rule as overcoming cumbersome approval rules which govern full condominium complexes, since homeowners associations (HOAs) often never bothered with applying in the first place.

“Most HOA’s that are not currently FHA approved have little interest in applying for approval. It seems most management companies aren’t open to it or they know there are issues they have run into in the past that prohibit FHA approval,” said Michael Mazursky, president of iReverse Home Loans. “This should definitely help many Seniors qualify for a HECM that in the past couldn’t proceed. The proprietary product has been able to fill the void, but this is a new outlet that should be extremely beneficial to Seniors.”

The industry’s trade association also lauded the new rules’ announcement.

“While NRMLA is working through the details of the new condo rules with our Board, outside counsel and HUD Issues Committee Chairperson, we certainly appreciate the Department’s release of these new rules,” said Steve Irwin, SVP of the National Reverse Mortgage Lenders Association (NRMLA) in an email to RMD. “Many senior condo owners have been frustrated by their inability to get a reverse mortgage on their condo, and this new rule should enable eligible senior condo owners to now take advantage of a reverse mortgage so they might continue to age in place.”

FHA estimated this new policy will notably increase the amount of condominium projects that can now gain FHA approval. 84 percent of FHA-insured condominium buyers have never owned a home before, according to agency data. Only 6.5 percent of the more than 150,000 condominium projects in the United States are approved to participate in FHA’s mortgage insurance programs.

“As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually,” the press release said.

Shawna McDonald, Reverse Mortgages Only Loan Officer has specialized solely in reverse mortgage loans for 11 years and has successfully completed hundreds reverse mortgages. Approved with 10 of the largest reverse mortgage lenders in the nation, 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. The website is http://www.SierraFoothillsReverse.com. NMLS #271335 BRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 BRE# #01386892

 

Experts: Home Equity and the Reverse Mortgage Can be the Key to Solving the Country’s Looming Retirement Crisis

And Yes, It Finally Did Snow in Grass Valley, Nevada City, Alta Sierra, Colfax and maybe a hint in Penn Valley. Now we all can’t wait for spring !

 

As Baby Boomers continue to retire en masse without sufficient savings to support their later years, it’s become glaringly apparent that the country is on the brink of a retirement crisis.

Pensions have dwindled, Social Security is insufficient, health care costs are rising and people are living longer than ever before, carrying little resources with them into retirement. But many older Americans do have one major source of wealth at their disposal: their house. And for some, utilizing their home equity could be the answer to their late-in-life money problems.

That’s why some experts are insisting that reverse mortgages – which allow older homeowners to access their home equity and remain in their homes – are an important public policy that must be preserved for future generations.

Alicia Munnell, director of the Center for Retirement Research at Boston College, said tapping home equity is essential to solving the country’s retirement crisis. “It’s very clear that for most middle-income people, their house is their largest asset. In the past, they really haven’t touched this asset in retirement, but we are in an environment where Social Security is providing lower replacement rates, and 401(k) plans have modest balances, and the time will come when the only way people will be able to maintain their standard of living will be to tap their home equity.”

The Urban Institute’s Laurie Goodman agreed that reverse mortgages could help millions of Americans achieve a more comfortable retirement.

Goodman pointed out that nearly 37% f senior homeowners are worried about their finances retirement, while many of them are sitting on a mountain of housing wealth, more than $3 trillion. “Tapping into home equity is a possible solution to the financial strain facing some elderly homeowners,” Goodman said. “The bottom line is that there is enormous untapped housing wealth for this age group and a significant untapped market for the housing finance industry.”

Goodman pointed to an Urban Institute study that revealed there are 920,580 U.S. households headed by someone over 65 that have an annual income at or below $20,000 and a liquid net worth at or below $50,000, but they also at least $100,000 in home equity. “These folks should be looking at using their home equity to help them manage their finances,” Goodman said. “All together, these less than 1 million household have $208 billion in home equity they could be using.”

But they’re not.

Goodman said reverse mortgages have a number of impediments preventing them from mainstream use, including consumer misconceptions and the loan’s high cost and complexity.

But these issues aren’t the only problems. Goodman said there’s a collective reluctance among older homeowners to utilize home equity. “Even if all the structural impediments were removed, behavioral and attitudinal barriers would keep many senior homeowners from tapping their housing wealth,” she said.

Goodman said that even though reverse mortgages have not gained widespread acceptance, they could help both low- and high-income homeowners achieve a more financially secure retirement.

“For low-income retirees or those who are financially burdened but own substantial housing wealth, tapping home equity could obviate the need to cut spending on essentials, such as food, health and medicine,” she said. “High-income households could leverage equity to modify their homes to improve in-home safety and mobility.”

________________________________________________________

If you’d like to explore options of using a Reverse Mortgage Loan for tapping into your home’s equity to pay for property taxes, maintenance, increase your retirement income by using a reverse mortgage credit line loan, or paying off an existing loan, whereby you then have no monthly mortgage payment requirement, give me a call to set up a no obligation, no pressure consultation in my conveniently located downtown Grass Valley Office: Shawna McDonald, Loan Officer, 10 Year Experienced Reverse Mortgage Specialist Sierra Foothills Reverse Mortgage Grass Valley l (530) 497-3010. http://www.SierraFoothillsReverse.com NMLS #271335 | CalDRE #00585530 Borba Investments Inc. CalDRE #01456165 Company NMLS #76801 These materials are not from, and were not approved by HUD or FHA   

Reprint from Jessica Guerin, reduced content for brevity https://www.housingwire.com/articles/48212-experts-say-home-equity-is-key-to-solving-the-countrys-looming-retirement-crisis

Purchase Reverse Mortgage or Post Sale Reverse Mortgage?

I often see clients considering downsizing and selling their existing home to purchase a more modest home.

The decision: “Do I sell my existing home and pay all cash for the replacement home and THEN get a reverse mortgage line of credit or, do a reverse mortgage for purchase on the replacement home?

As well as being a licensed loan officer I am a real estate broker and have known in theory that it is risky to pay all cash on the new home and close escrow ASSUMING the replacement home will qualify for a reverse mortgage post sale, but have not had actual examples until, unfortunately, this year where I had several examples.

I did not meet with the individuals in these examples prior to the purchase of their replacement home; they came in post close of escrow to inquire about taking out a RM credit line. The sale of their prior home did not cover the price of the replacement home, causing them to dip heavily into savings accounts to pay all cash. In doing preliminary research on their properties I had to deliver the bad news: their replacement properties would not qualify for a reverse mortgage and they were shocked.

How could a reverse mortgage for purchase process, rather than paying all cash, have protected these folks? The RM for purchase process protects an individual via the real estate purchase contract contingency clause, giving them several weeks or more to go through the loan qualifying process with a loan officer, appraiser and underwriter working on their behalf to determine if the property and they will qualify for a RM. If the property and they receive loan approval they can confidently close escrow knowing their financing will be in place. However, if going through the process it is determined the subject property or they will NOT qualify for a reverse mortgage, the individual can walk away during the contingency period and not lose their earnest money deposit.

It’s wise to see a loan professional well in advance of selling an existing home and looking for a replacement as there are numerous RM pre-approval steps required.

 

Shawna McDonald, License Loan Officer, has completed hundreds of reverse mortgage loans and is approved with 10 reverse mortgage lenders. She is available by appointment. Sierra Foothills Reverse Mortgage 412 E. Main Street Suite N, Grass Valley, (530) 497-3010. Her website is www.SierraFoothillsReverse.com. NMLS #271335 | CalBRE #00585530 Borba Investments Inc. Company NMLS #76801 |Company BRE # 01446165 These materials are not from, and were not approved by HUD or FHA

 

Reverse Mortgages & Long Term Care Insurance

 What does this picture of the beach have to do with reverse mortgages and long term care? Nothing, but I have to get out of this heat and to a beach soon, just so you know…..

Ok, onward. I recently wrote an article for The Union, our general circulation newspaper here in Grass Valley, California exploring the topic of seniors’ potential long term care needs, long term care insurance, and reverse mortgages, written from the prospective of how my client expressed to me her thoughts on taking out a reverse mortgage credit line for her “maybe” future need of in home care vs. taking out a long term care insurance policy:

Recently a client reinforced the trend I’m seeing for clients’ to use a reverse mortgage credit line as not only a source of income as needed, a standby source of emergency funds, but also as an alternative to long term care insurance premiums.

It is estimated that approximately 70% of people turning 65 will need long-term care at some point in their lives. It is an uncertain expense, no life crystal ball. There are various methods to fund the cost: long term care insurance, Medicaid, self funding through savings, liquidation of personal assets, and/or a reverse mortgage credit line.

Genworth Financial, a long term care insurer, estimates approximately $45,750 annually for in home health aide, $80,300 annually for shared nursing home rooms, while assisted living costs vary dependent on the level of care.

Long term care insurance did not appeal to her: paying premiums for an insurance she was not sure she would ever need, coupled with the risk of rising premiums.

Medicaid would require her to liquidate nearly all her assets to qualify, wanting assets for heirs, she ruled out this option.

She owns her home outright, has retirement income and IRA assets, yet she decided to obtain a RM credit line loan as a standby in the event she needs in home care. The growth feature of the RM credit line was an added bonus: on amortization charts she was able to see how her reverse mortgage credit line borrowing ability grew over time. What was also appealing to her: she did not have to use her reverse mortgage credit line unless in home care was required, and if it was, then she controls the decisions and spending for care, thus eliminating having to negotiate with an insurer, and that she will only accrue an interest charge on funds actually borrowed.

Should she not need in home care, her untapped RM credit line will revert to inheritable equity for her heirs upon the home’s sale. As with all reverse mortgage loans she retains ownership and control of her home.

Shawna McDonald, Loan Officer, has successfully completed hundreds of reverse mortgages and is approved with 9 reverse mortgage lenders, ensuring clients receive low fees and great rates. Her office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main Street Suite N Grass Valley, (530) 497-3010. Her website is www.SierraFoothillsReverse.com.

The opinions expressed here are solely those of Shawna McDonald, Loan Officer/Real Estate Broker Associate. Copyright © 2016. Shawna McDonald NMLS #271335 CA-BRE # 00585530 DBA Sierra Foothills Reverse Mortgage, Borba Investments Inc, DBA MLS Reverse Mortgage Auburn, CA NMLS #76801 BRE #01456165 ~ Company MLS #76801

 

 

Purchase Reverse Mortgages Grow in Popularity

BUYING A HOME IN RETIREMENT ~ But I Thought I’d Have to Pay all Cash !

 

This real estate season of 2016 I am seeing home buyers 62 years of age and older utilizing in greater numbers the Reverse Mortgage Purchase Loan; a loan that expands home buying power and conserves a nest egg from the sale of an existing home. Here’s an example:

Wanting to downsize, Karen and Jim are retired 76 year olds whose home sold for $550,000.Their replacement home costs $400,000, however their retirement income does not qualify for a conventional loan, they thought their only option was to pay cash, doing so leaves them $150,000 from their home sale, not as large a nest egg as hoped for.

Enter the RM Purchase Loan:  income qualifying is to prove ability to meet on-going property taxes, home insurance, (and HOA) obligations; thus qualifying for a RM Purchase Loan is less stringent than for a conventional loan. On a home valued at $400,000, Karen and Jim’s down payment is $171,000 (43% of the purchase price), a far cry from paying all cash of $400,000. The balance of the purchase price plus fees is their RM mortgage. Just as with all reverse mortgages, they will be monthly mortgage payment free.

 THE BIG NEWS: instead of having a nest egg of $150,000 from the sale of their original home had they paid all cash for the replacement home, the RM Purchase Loan allowed them a residual nest egg of $379,000. Could a RM Purchase Loan have been used to buy a higher priced home than their original home of $550,000? Generally speaking yes; folks I have worked with have obtained their dream home with a RM Purchase Loan.

A RM Purchase Loan is titled with Karen and Jim as owners of the home, (they do NOT give up ownership of the home, a common RM misconception). The home can be sold by them or heirs, the reverse mortgage paid off, and they or heirs keep the remaining equity. As with any home loan, it is required that property tax, maintenance, and home insurance obligations be kept current.

This is an exciting program opening up more possibilities for seniors, give me a call if you would like to see your personalized loan scenario and obtain program details.

Shawna McDonald, Loan Officer has successfully completed hundreds of reverse mortgages. Approved with 8 of the largest reverse mortgage lenders in the nation, 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. The website is www.SierraFoothillsReverse.com.

INMLS #271335 BRE 00585530 Borba Investments, Auburn, CA Company NMLS #76801 Company BRE #01456165

Clearing Up Common Misconceptions About Reverse Mortgages

SPRING IS HERE !

Misconceptions: The Lender Owns My Home

False. You remain on title as the owner of your home. You can decide to sell at any time. You are responsible for maintaining the home, paying property taxes and insurance, and HOA dues if applicable, all of which are standard clauses in any home loan.

 Misconceptions: My Kids Will Have To Repay My Loan out of Their Own Funds

False. Reverse mortgages are non-recourse loans. Which means that when the home is sold to repay the RM debt any remaining equity after the sale of the home goes to the original owner(s) or if they have passed away, the remaining equity goes to the designated heir(s). If the loan balance exceeds the sale price, there is no debt liability to the heirs, FHA insurance pays the remaining debt liability.

 Misconceptions: You Can’t Get A Reverse Mortgage If You Have a Mortgage

False. A Reverse Mortgage must be in first lien position, which means your existing mortgage will be repaid out of the proceeds of the RM loan, with the difference going to you as either a lump sum or set up as a residual line of credit to be drawn and spent over time at your discretion. If there is no mortgage on the home just a RM credit line is set up.

 Misconceptions: If You Are Not Low Income, You Do Not QualifyFalse. In fact an increasing number of Americans, upon advice of their financial planners, are obtaining Reverse Mortgage lines of credit to safeguard their retirement investments from excessive draws and the tax liability these draws may incur. Reverse mortgage proceeds are not taxable.

Misconceptions: If I Live Too Long I Can Get Evicted

False. You, the homeowner, cannot get evicted regardless of your age, this is a lifetime loan, provided you adhere to the rules of your loan: pay property taxes and insurance, maintenance and HOA dues; these are all requirements of real estate loans in general.

Misconceptions: I Can’t Use the Money at my Discretion

False. It’s your money. Whether you want to remodel or pay for upkeep of your home, pay for your child’s wedding, go on vacation, or leave some or all of the credit line funds untapped and available for emergencies, there are no restrictions on what you can do with your funds.

 

Shawna McDonald Loan Officer, has successfully completed hundreds of reverse mortgages and is approved with 8 reverse mortgage lenders, ensuring clients receive low fees and great rates. Her full service office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main Street Suite N, Grass Valley, (530) 497-3010. Her website is www.SierraFoothillsReverse.com.

The opinions expressed here are solely those of Shawna McDonald, Loan Officer/Real Estate Broker. Copyright © 2016. All Rights Reserved. Shawna McDonald NMLS #271335 CA-BRE # 00585530 DBA Sierra Foothills Reverse Mortgage and Borba Investments Inc, DBA MLS Reverse Mortgage Auburn, CA NMLS #76801 BRE #01456165 ~ HUD approved lender.

The Changed Faces of Reverse Mortgage Loan Clients

  I  hope that when I retire I can do crafty things like, say in October, make leaf lined candle jars, because I just never seem to have time  while working full time at what I love:  helping Grass Valley, Nevada City and Penn Valley seniors stay in their homes monthly mortgage payment free, with a reverse mortgage, the “peace of mind” loan. Truth be told, I love what I do so much that I just may never get to craft leafy type things anytime soon.

If you want to skip this blog post and go directly to my website or contact me for an appointment, here you go: http://www.SierraFoothillsReverse.com or (530) 497-4010.

This is a non-technical post, lately I’ve done mostly technical type blog posts about different aspects of reverse mortgages, but as I enter my 8th year of full time specialization in reverse mortgages I’m reflecting on the changed faces of whom I am helping with the “peace of mind loan” once the loan is complete.   I have had almost all my clients of late call it such when we’ve either paid off their existing mortgage, created a credit line for them, or a combination of both, a few opt for lifetime incomes. When I check back in with clients, to a person, they all express the same things: that they were losing sleep over a depleted savings accounts and worrying about the inevitable repair, health crisis, or need for a newer car, all things in the back of their minds they knew could not be covered by savings, and that this loan had restored their peace in life and ability to enjoy life fully without nagging worry and sleep loss. Or, for the some of my clients, who could cover these types of expenses, but to do so the concern was they had to take more than mandatory draws out of a retirement fund, and then often they worried that they had “wasted money” to pay for a tax consequence in doing so.  Or the worry over NDFA, (No Damn Fooling Around) industry acronym for property taxes are due in November, must be paid by December, due in February must be paid by April. Ugh, worry over property taxes or the ever increasing fire and casualty costs that come with living in our beautiful mountain area, that’s no fun.

Often in the initial meeting or workshop seminar the clients I meet have worried faces, when the loan is complete there is a spring again in their step, a look on their faces of a weight lifted. Years ago I owned a successful real estate company in Sebastopol in Sonoma County, few women back then in all of Sonoma County had accomplished this, I was proud of having done so. Of course I was happy when the day came to hand over the keys to excited new homeowners, but nothing compares to the feeling I get now when I call clients to tell them we’ve just completed their reverse mortgage loan, and then a week or so later we meet for me to give them a thank you gift, because that is when I see happier faces and hear them feel free to express to me their feelings of relief and peace of mind restored, that’s their gift to me.

It’s a small community, even further down the line I run into my clients here and there post loan, that’s when I receive another  gift from clients, when they tell me how their life has changed post reverse mortgage: what new things they now can do, share with me a picture or two of a trip to see grandchildren, a motorhome taken out of storage and pictures of a trip, (where as before the gas had become too much of a budget buster to take trips at all), a falling apart deck now repaired and used for bbq’s and family gatherings, one set of clients whose mortgage was paid off through a reverse mortgage were still working part time well into their 70’s to cover the monthly payment, their comment was “we now have time to lay in a hammock and read a book overlooking the pond on our land, in our home”. Yes, I’m the lucky one indeed.

~Shawna McDonald, Loan Officer NMLS #271335, Real Estate Broker 00585530

Sierra Foothills Reverse Mortgage 412 E. Main Street, Grass Valley 530-497-3010

http://www.SierraFoothillsReverse.com

Chicago Tribune: Reverse Mortgages Becoming Better Options for Seniors

The “windy” city’s largest newspaper recently printed this article. I was just thinking how lovely it would be if our next national reverse mortgage lenders convention were in Chicago, they have some pretty amazing restaurants, not that they let us out much from seminars when we attend one of these conventions, maybe I could stay a little longer !  I like the citizens’ feistiness too, here is a picture of seniors protesting cuts to Medicare. We boomers and our protests….carry on!

If you are not interested in this article but would like to learn more about my 7 years of reverse mortgage experience and local Grass Valley Reverse Mortgage office click here:  http://www.SierraFoothillsReverse.com or even easier, just call me: 530-497-3010.

Ok, I’m back on task…Reprint form Chicago Tribune recent article:

Reverse Mortgages are Becoming a Better Option for Seniors

Elliot Raphaelson, Tribune Content AgencyThe Savings Game

In past columns, I have generally been skeptical of reverse mortgages. However, the Reverse Mortgage Stabilization Act of 2013 introduced more customer safeguards. And some lenders are offering better terms and lower upfront costs.

If you do your homework, you might find a reverse mortgage that provides you with benefits that other financing alternatives do not provide. A more reliable line of credit is one of the more important potential advantages.

I highly recommend “What’s the Deal with Reverse Mortgages?” (People Tested Media), a new book by Shelley Giordano, principal of Longevity View Associates, a reverse mortgage consulting firm, and chair of the nonprofit Funding Longevity Task Force. It will help you understand options such as fixed vs. variable loans, the nuances of using credit lines and all of the mortgage fees.

Giordano discusses the merits of home equity lines of credit (HELOCs) vs. those of home equity conversion mortgages (HECMs, FHA-insured open-ended reverse mortgages). HELOCs, she argues, have significant disadvantages. Borrowers have to repay principal and interest, whereas reverse mortgage borrowers are under no such obligation. Financial institutions can cancel HELOCs if they believe that borrowers have insufficient income or assets. Borrowers with a HECM line of credit don’t have this vulnerability.

In prior columns, I argued that one of the significant disadvantages of HECM’s was the high initial closing costs. Giordano says that some financial institutions are offering reverse mortgages with closing costs as low as $250. However, the tradeoff is higher interest rates. In my opinion, if you intend to maintain a line of credit for a long period of time, then the HECM has significant advantages over the HELOC, if you can obtain a HECM with very low (or no) closing costs. (Editorial Note: Come shop with Sierra Foothills Reverse Mortgage located in downtown Grass Valley and I’ll shop EIGHT of the largest reverse mortgage lenders in the nation for YOU, and I’ll present you with your interest rate and fee options!)

The Reverse Mortgage Stabilization Act of 2013 provides some safeguards for both consumers and lenders. The act introduced financial assessments as the basis for HECM loan approvals. These assessments were developed to ensure that individuals would have the financial wherewithal to maintain their homes, pay real estate taxes and homeowner insurance. Prior to this reform, reverse mortgages had a high rate of foreclosure. As long as individuals can meet these requirements, and maintain residence in the home, they will not face foreclosure.

The Act of 2013 also addressed a prior disadvantage. Previously, if the only individual named in the mortgage agreement died, the surviving spouse would have to repay the outstanding loan in order to remain in the home. Under the new provisions of the act, a non-borrowing status (NBS) was created that allows the widow(er) to defer due and payable status provided that within 90 days after the death of the last surviving borrower, he or she establishes legal ownership or other ongoing legal right to remain in the property.

For seniors looking to alleviate tight budgets, I believe that options other than reverse mortgages should be considered, such as downsizing or selling and renting an apartment. Consider your health. Reverse mortgages lose their primary advantage if you cannot stay in the residence over the long term. If it is important for you to leave home equity to your heirs, then reconsider using a reverse mortgage, because there is no guarantee that there will be any equity left after your death.

(c) 2015 ELLIOT RAPHAELSON. DISTRIBUTED BY TRIBUNE CONTENT AGENCY, LLC.

Copyright © 2015, Chicago Tribune

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