This video is a replay of a live webcast REALTOR® Magazine presented on April 21, 2016, about selling a home that has a reverse mortgage. The program featured Leslie Flynne, chief operating officer of Reverse Mortgage Solutions, Inc., and Steve Irwin, executive vice president of the National Reverse Mortgage Lenders Association. Jon Boughtin of NAR Public Affairs hosted the program. At a minimum listen to the first 20 minutes! Please contact me if you have further questions.
It is good news that President Obama signed the 2016 Older Americans Act (OAA) Reauthorization into law this week. Our local Monterey County services including Alliance on Aging’s HICAP, Ombudsman, Outreach and Benefits Checkup programs receive Older Americans funding for the services they provide. Meals on Wheels, Legal Services for Seniors, Alzheimer’s Association and some other senior providers are also recipients of this funding. This reauthorization is a very important step to ensure the continuation of these services and funding.
In the beautiful spring month of May 2011, I received a call from a business friend who said “we are ready to sell our home of 20 + yrs. and move closer to services!” This excited announcement could only come from a couple living in the country and longing for a short commute and a plethora of conveniences. The reasons he gave included health care resources, educational opportunities, not to mention friends and all that an urban environment offers compared to living in a rural community.
That phone call and sincere desire to change led to a 5-year search and retirement plan involving everything from the perfect, new house wish list to current home repairs to coming to terms with the inevitability of retiring from a lifelong career. One steady conversation was about the pending reality of a fixed income and their modest bank reserves. Then of course along the way there was angst of locating a home in the appropriate price range, the right configuration, plus the all-important timing of selling their primary residence before buying the next one. That two- step was required in order to provide the down payment for the new primary. Only this wasn’t just the next residence, this home would be the last one, and this home would be bought with a HECM purchase money loan.
Imagine being in your late 70’s and buying a new home, in the right price range, with just the right floor plan, near all the required resources and amenities for retiring on a fixed income. Imagine too that your once modest bank account, just received an infusion of funds from the sale of your primary residence. Why? You only need some of the proceeds from the sale to buy the new home.
Your new, perfect, home with 2 bedrooms and 2 baths only required a cash outlay (down payment) of less than ½ the purchase price and the rest is a reverse mortgage (HECM purchase loan) with no required monthly payments. Did I mention that your bank account swelled with new funding from the sale of the old house?
In the end, a good life for my friends changed for the better; a little more money in the bank, (what a bonus that became) health care resources and various other benefits, especially extended family and friends nearby, all reachable within a short leisurely drive.
At 87 years’ young, life was good. Still an avid golfer, gracious home entertainer of family and friends, active on local charity boards and a philanthropist from the heart, Henry had it all. Well, that is to say until an unhealthy heart had its way with him and after a few surgery’s and other procedures Medicare was not exactly keeping up with all the medical bills. So the logical thing to do was access the retirement funds and the income tax cost was punishing. Yes, he has a substantial passive income but those medical bills were draining one fund after another until Henry discovered the beauty of a HECM reverse mortgage.
His home was free and clear of any mortgage, the children had homes and lives of their own including money in their own bank accounts. Henry did not want to be burden to his children and wanted very much to replenish his retirement funds. He saw the HECM as a way to maximize cash flow again and balance out his retirement funds. A month after signing his loan application his wish came true and his financial stress melted away. He tells me he has never felt healthier! and is grateful for his new found piece of mind. He likes the idea too that he also has a HECM line of credit in the event he has another medical emergency. Life is good again!
Here is a great article from Market Watch .com that discusses some of the ways in which a planner can help look at the whole picture of retirement when it comes to your money! Retirement Planner article click here The author provides information too, about the HECM and its use for millions of Americans whose home represents their single greatest financial asset. I may add the HECM can provide additional income, be an emergency cash fund via a line of credit or can be used to preserve a client’s investable assets / savings. This topic around financial planning and ways in which a reverse mortgage enhances the client’s options with cash flow is the new buzz this year. No longer the loan of last resort, the HECM is coming of age!
The White House is preparing for more than a new administration…
The seniors are coming. That’s what the White House is preparing for after it held its Conference on Aging, where the private and public sector discussed how to address the coming “age wave” of seniors who wish to remain in their homes during retirement.
The White House recently released a final report from the sixth Conference on Aging that was hosted in July 2015, outlining a push for more caregiver support to homebound seniors and technology solutions that enable independence.
The aging conference has been conducted every decade since 1961 and brings together older Americans and their families, caregivers and advocates. 2015 was the 50th anniversaries for some of the most important federal programs for seniors: Medicare, Medicaid and the Older Americans act. Not to mention, Social Security also turned 80 this year.
One of the key announcements was a proposal from the U.S. Department of Agriculture that would increase accessibility to nutrition for homebound seniors by allowing the Supplemental Nutrition Assistance Program (SNAP) benefits to be used for food delivery services to these households.
The topic that attracted the most attention was caregiving, according to the WHCOA report. For most older Americans who live at home, family caregivers are doing most of the legwork for a variety of tasks. As more adults age in place, it is more likely this reliance on family members will shift to paid caregivers.
Within the private sector, technology was a clear focus of the conference, as companies such as Uber announced new community-based services to serve older adults living at home.
From learning the basic functions of a reverse mortgage to verifying common myths related to these loans, the CBS News article highlights 10 important need-to-know facts that every consumer should consider when it comes to reverse mortgages. “Some people think taking out a reverse mortgage means the bank owns your home, but that’s not true,” Glink credits National Reverse Mortgage Lenders Association President and CEO Peter Bell with saying in the article.
Other areas of focus include sections on why borrowers decide to obtain reverse mortgages, interest and fees, popularity of Home Equity Conversion Mortgages over the year and the importance of bringing family into the conversation, among other critical must-knows.
Happy New Year 2016! It is day one and I am feeling quite grateful, most hopeful and optimistic as I consider the year ahead. My mother wants to experience her 100th birthday on July 22. Her youngest great grandchild, my great niece will turn 2, our oldest son will turn another decade and join the 30 somethings. There are a lot of ages in the middle, lots of family looking forward to another year, desiring everything from good health, better income, new career, new home, school, toys and the list goes on. Contemplating life at almost 100 yrs. of age however must be utterly extraordinary. The look back takes her to 1916, which to me seems like a millennium ago, and yet, a mere 37 years later, I was the last of four children born to the family. She is strong today in her faith and convictions, her roots are deeply fused to an Irish and French heritage, her vision for all of us is steeped in a love unwavering, which I know remains her continued, heart felt desire for 2016.
May your new year be at peace with the world around you. May you find joy in the moment, comfort in friendship, and truth in the milestones of a fulfilled life.
The November 2015 issue of Pebble and Living Carmel magazines includes a contributed story by me, discussing briefly an overview of this loan as a retirment planning tool. Pebble Magazine Nov 2015 More often today than ever before, this loan is used as a retirement planning tool whether as a refinance to stay in primary residence or as a purchase money loan to secure the next home. Although the industry has seen changes this year in requiring a new fiancial assessment, homeowners continue to explore the possibilities of use with the HECM. Check out the article!
There are several ways retirees, or even pre-retirees, can extend their savings when working longer is not an option. And one of these strategies includes using a reverse mortgage in retirement planning, suggests The New York Times.
In a recent article, the NY Times offers six strategies that can allow retirees—and those nearing retirement age—to stretch their savings, whether it is through the use of financial instruments like reverse mortgages and annuities, maximizing Social Security, downsizing one’s home, reducing taxes on retirement assets like IRAs, or by simply practicing living on less.
On reverse mortgages specifically, the article notes how using a “standby reverse mortgage” with a line of credit feature can provide borrowers with some extra funds during retirement that can be tapped when necessary.
“Opening a credit line while interest rates are low, even if you don’t need the money now, can result in a larger credit line now than when rates are higher,” said John Salter, an associate professor of personal financial planning at Texas Tech University, in the NY Times article.
While a traditional home equity line of credit may be cheeper, the article notes, the line can be reduced or canceled and borrowers have to start making at least minimum payments on the lender’s schedule.
“But it [HELOC] may work if the homeowner expects to move within a few years, for instance, and downsize,” the article states.