Celebrating Family Caregivers - National Caregiver Month

President Barack Obama, in his Presidential Proclamation of National Family Caregivers Month - November 2011 - states;

“Across our country, millions of family members, neighbors, and friends provide care and support for their loved ones during times of need. With profound compassion and selflessness, these caregivers sustain American men, women, and children at their most vulnerable moments, and through their devoted acts, they exemplify the best of the American spirit.”

Statistics from the Administration On Aging show that the population 65 and older is expected to grow from its current 13% to 19% of the total population by 2030. With the older population increasing, the need for elder caregiving will continue to increase. Family caregivers play a vital role in filling these caregiving needs. Who better than family can understand the needs and ensure the best care of their loved ones....more

Using Your Home Equity for Long Term Care

For many seniors the equity in their home is their largest single asset, yet it is unavailable to use unless they use a home equity loan. But a conventional loan really doesn't free up the equity because the money has to be paid back with interest.

A reverse mortgage is a risk-free way of tapping into home equity without creating monthly payments and without requiring the money to be paid back during a person's lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title "reverse mortgage".

Many seniors are finding they can use a reverse mortgage to pay off an existing conventional mortgage, to create money to pay off debt, make home repairs, or for remodeling.

For those seniors who are in need of long term care and want to stay in their home, a reverse mortgage can create the money needed to pay for in-home personal and medical care. They can also pay for needed medical equipment and handicap adaptation to their home.

There are no income, asset or credit requirements. It is the easiest loan to qualify for.

A reverse mortgage is similar to a conventional mortgage. As an example:

• The bank does not own the home but owns a lien on the property just as with any other mortgage
• You continue to hold title to the property as with any other mortgage
• The bank has no recourse to demand payment from any family member if there is not enough equity to cover paying off the loan
• There is no penalty to pay off the mortgage early
• The proceeds from a reverse mortgage are tax-free and can be used for any legal purpose you wish

False Beliefs Regarding Reverse Mortgages

• "The lender could take my house." The homeowner retains full ownership. The Reverse Mortgage is just like any other mortgage; you own the title and the bank holds a lien. You can pay it off anytime you like.
• "I can be thrown out of my own home." Homeowners can stay in the home as long as they live, with no payment requirement.
• "I could end up owing more than my house is worth." The homeowner can never owe more than the value of the home at the time the loan is due.
• "My heirs will be against it." Experience demonstrates heirs are in favor of Reverse Mortgages.

Virtually anyone can qualify. You must be at least 62, own and live in, as a primary residence, a home [1-4 family residence, condominium, co-op, permanent mobile home, or manufactured home] in order to qualify for a reverse mortgage.

The amount of reverse mortgage benefit for which you may qualify, will depend on

• your age at the time you apply for the loan
• the reverse mortgage program you choose
• the value of your home
• current interest rates
• and for some products, where you live

As a general rule, the older you are and the greater your equity, the larger the reverse mortgage benefit will be (up to certain limits, in some cases). The reverse mortgage must pay off any outstanding liens against your property before you can withdraw additional funds.

The loan is not due and payable until the borrower or borrowers no longer occupy the home as a principal residence (i.e. the borrower sells, moves out permanently or passes away). At that time, the balance of borrowed funds is due and payable, all additional equity in the property belongs to the owners or their beneficiaries.

The most popular reverse mortgages are the so-called HECM loans. HECM loans require that the applicant meet with a government approved counseling agency to be sure the applicant understands the reverse mortgage process.

The Federal Trade Commission states:

“Before applying for a HECM, you must meet with a counselor from an independent government-approved housing counseling agency. Some lenders offering proprietary reverse mortgages also require counseling. The counselor is required to explain the loan’s costs and financial implications, and possible alternatives to a HECM, like government and nonprofit programs or a single-purpose or proprietary reverse mortgage. The counselor also should be able to help you compare the costs of different types of reverse mortgages and tell you how different payment options, fees, and other costs affect the total cost of the loan over time. Most counseling agencies charge around $125 for their services. The fee can be paid from the loan proceeds, but you cannot be turned away if you can’t afford the fee.”

The Washington Times: Reverse mortgages satisfy many goals

Silver Tsunami: Making the Case for Reverse Mortgages - Financial Planning

I came across a good article about reverse mortgages from the financial planning standpoint.

Silver Tsunami: Making the Case for Reverse Mortgages - Financial Planning

Reverse Mortgage As An Alternative To Foreclosure

I just came across a great article written by an Oregon Real Estate Broker. She talks about using a reverse mortgage to stop foreclosures against senior homeowners. Some seniors who even have their house paid off but are behind in property taxes just a few thousand dollars are facing foreclosure because they don't know that they have any options.
I recently was able to help a senior couple who had lived in their home over 20 years save their home from a Sheriff's Sale. It was one of the most satisfying transactions I have ever done in this business and my clients were truly grateful.
If you know any senior homeowners who may be having a hard time making ends meet, I would love to talk to them.
Here is a link to the article.

New Scam Targets Elderly Homeowners with Reverse Mortgages

We came across this story about a new scam targeting seniors with reverse mortgages.

Because it's so new, there isn't an official name for it, so we are calling it the "Reconveyance" scam.

Basically, the con is to scare seniors into paying the scammers to ensure they have clean title.

To read the article, click here.

Using a Reverse Mortgage as a financial planning tool

Using home equity as part of their retirement planning was never part of the equation for Older Generations according to Financial Planning.

Older generations considered the home something to be preserved, paid off free and clear before retirement and left to heirs as a legacy. However, many in the industry feel it’s time to reconsider and a reverse mortgage as an integral part of a client’s long-term portfolio and to figure out strategies for leveraging clients’ homes that go beyond basic reverse mortgages

“Historically, the previous generation was dead set against ever using the house to fund retirement,” says Brad Davis, vice president of retirement income solutions for Nationwide Financial. And financial planners often view their job as asset preservation rather than the drawing down of assets. “When advisors talk to clients about assets for retirement, home equity really hasn’t been part of that discussion,” says Sandra Timmerman, director of the MetLife Mature Market Institute (MMI).

In the past many advisors have viewed reverse mortgages as complicated and expensive, used primarily by seniors in lower income brackets as a last-ditch solution says FP.

Yet seniors have a sizable portion of their net worth tied up in their homes. In today’s economy, even affluent clients may need to reconsider utilizing their home equity as a resource. “A lot of affluent people have been hit hard by the stock market crash, lost their shirts investing in real estate or perhaps their golden parachute or retiree pension has evaporated,” says Barbara Stucki, PhD, director of the Reverse Mortgage Initiative for the National Council on Aging. “What may at one point have seemed like a secure future may seem less so now, and they may need to fall back on assets [such as the home] they once would not have considered using.”

House Money