Reverse Mortgage News

Former GNMA CEO Says Enough With All the Negative Press Related to Reverse Mortgages Legendary Actor and AAG Spokesperson, Peter Graves, Speaks Out for Reverse Mortgages MetLife Reports on Changing Role of Reverse Mortgages in Retirement
A Step By Step Guide To Reverse Mortgages
The 4 Steps of Long Term Care Planning
Women Are More Likely to FaceFinancial Hardships in Retirement
Texas Retirees Find Alternative to Going Back to Work
Proceeds Usage Survey Report
HUD Secretary Touts Reverse Mortgages (June 2007)

Reverse Mortgages - A Step-by-Step Guide

Author: Melinda Hipp

A reverse mortgage is a good source of income for seniors. The government does not tax the funds received, and the borrower is free to use the money in the way he/she likes.

Reverse mortgages are only available to people who are 62 years or older, and the transaction must be done on the borrower's primary residence. There is no limit to how many reverse mortgages a borrower may have in their lifetime, however a borrower may only have one reverse mortgage at a time. If a borrower has a reverse mortgage, and the borrower can gain additional benefit from a new reverse mortgage, a borrower may obtain a streamline refinance of their reverse mortgage at a substantially reduced cost.

Getting a reverse mortgage involves a number of simple steps designed to assure that the lender is in full compliance and to provide the borrower with various safeguards. Here are the steps you can expect when applying for your reverse mortgage:

Education: A very important first step is to receive a through explanation of how a reverse mortgage works, and specifically how the terms of the loan will apply to you. Some of this information you can obtain from various publications, however nothing can replace a fact to face meeting with a qualified reverse mortgage advisor. Since HUD, not the lender, regulates the interest rates, loan amounts, terms and fees, the one area for you to shop around is for the lender with the greatest level of knowledge and experience with reverse mortgages. There are many well-meaning mortgage lenders, with some understanding of the program, however selecting a lender that specializes only in reverse mortgages can make a great deal of difference in how well they can educate you and how simple they can make the rest of the process.

Counseling: Once you are satisfied that you have a good understanding of the program, and generally feel this may be a good program for you, the next step is to receive free independent counseling form a certified, HUD-approved counselor to make sure that you have had all your questions answered and that there's been no confusion. It's a protection device that the government has built into the process of obtaining a reverse mortgage.

Application/Disclosure: Once you have completed your counseling, and have confirmed that a reverse mortgage is the right decision for you, your loan advisor will meet with you to complete your application, discuss the options of how you want to receive your funds, and obtain copies of a small list of documents needed for your underwriting file. During this meeting a good reverse mortgage advisor with go back over the critical information, and provide you with complete disclosure of all the information that applies to your transaction including rate information and a full disclosure of fees associated with your loan.

Appraisal and Title: Once your loan application is complete your lender will order an appraisal and a title search on your home. The appraiser will contact you for a convenient appointment time to view your home, and a full appraisal report will usually be provided within a few days.

Underwriting: Once the appraisal and title report are complete, the file will be sent to a HUD approved underwriter who will verify the accuracy of the information in the file, and assure that the borrower has received complete disclosure about their loan. The underwriter will underwrite the appraisal and title, request any clarification necessary, and issue a clear-to-close status on the file. This step does not take as long as a standard “forward” mortgage as there are no income, asset or credit verifications to be concerned about.

Closing: Once the underwriter has issued the clear to close, your loan advisor will contact you to reconfirm how you want your funds set up, and will arrange a convenient date and time for the closing. After signing the loan documents, you will have a three day right-to-cancel. On the first business following the expiration of the 3 day right to cancel the title company will disburse funds as requested and record all the documents with the county in which your property is located.

Repayment: The homeowner does not make any monthly mortgage payments to lender during the life of the loan. The loan is repaid when the homeowner ceases to occupy the home as a principal residence. The loan may be repaid by the homeowner or the heirs/estate, with or without a sale of the home. The repayment obligation can't exceed the home's value or sales price. Reverse mortgages provide a safe secure solution for seniors to live out their life in the comfort of their own home with the peace of mind and dignity they deserve.

The 4 Steps of Long Term Care Planning

1. Remaining independent in the home without intervention from others
2. Maintaining good health and receiving adequate health care
3. Having enough money for everyday needs and not outliving assets and income

Yet, it is our experience that the majority of the American public does not plan for the devastating crisis of needing eldercare. This lack of planning also has an adverse effect on the older person's family, with sacrifices made in time, money, family lifestyles and even affecting the family’s or caregiver’s medical and emotional health.

Because of changing demographics and potential changes in government funding, the current generation -- more-than-ever -- needs to plan for long term care before the elder years are upon them.

What Is Long Term Care?

The need for long term care arises when an individual requires, from someone else, assistance with medical care, daily living activities, comfort, supervision or advice. This need for care may be caused by an accident, disease process, or frailty. Such conditions may require help with the ability to move about, dress, bathe, eat, use a toilet, medicate, and avoid incontinence. Also care may be needed to help the disabled person with household cleaning, preparing meals, transportation, shopping, paying bills, visiting the doctor and answering the phone. Oftentimes, long term care in the form of supervision or confinement is needed due to cognitive impairment from stroke, mental retardation, depression, dementia, Alzheimer's, Parkinson's disease and so on. Most long term care is provided at home by family members.

What Is Long Term Care or Eldercare Planning?

For seniors, the terms "long term care" and "eldercare" are synonymous. For younger people, "long term care" is the more appropriate phrase. For the uninformed family member, eldercare or long term care might appear to be a very straightforward and easy-to-understand process. Unfortunately, the reality is that long term care is very complicated and finding care systems and providers is a frustrating and time-consuming process. There is no one single source to help caregivers find services or solve problems with a simple phone call or a single community contact. For this reason, planning for care requires a great deal of prior knowledge in order to avoid operating in a crisis mode trying to find help when the need for care suddenly arises. However, knowledge of long term care systems is not enough. Because it can happen suddenly, at any time, you must take action now to prepare for the day when you will need to deal with eldercare for your loved ones or for yourself. This action involves

Government programs are limited and according research by the National Care Planning Council ( http://www.longtermcarelink.net/), only 16% of all long term care services are provided by government programs. The other 84% is provided free of charge by family members, friends, charity, church groups or volunteers or paid for by private funds.

STEP 2-Funding the Cost of Long Term Care (Having funds to pay for care greatly expands the choices for care settings and providers.)
Much emphasis is being placed on purchasing long term care insurance or arranging for reverse mortgages in order to fund the cost of care. These are two excellent tools for providing funding but in reality, this approach for planning is not working that well. After 30 years of being touted as the ultimate solution, less than 2% of the American public and only 9% of seniors own long-term care insurance policies and using reverse mortgages may be a good strategy but in practice, few seniors are using them to pay for care.   (Call Melinda Hipp , Reverse Mortgage Specialist, for more information (877) 492-4900.)

Those people who need help with long term care and use the services of professionals often find they save money over doing it themselves. They also reduce their stress and they free up a considerable amount of their personal time. Another benefit with using professional help, such as a care manager, elder law attorney or mediator, is to help you alleviate or avoid family conflicts that often arise as a result of care-giving. Hiring professional advisers or providers to help with long term care is no different than using professionals to help with other complex issues such as car repairs, dealing with taxes or dealing with legal problems With their education and training, long term care professionals also bring experience that only comes from dealing with countless hands-on, care-giving challenges. In much the same way that a three legged stool needs all three legs to be useful, the care planning approach needs at least three key entities in order to be successful. It needs YOU, LONG TERM CARE PROFESSIONALS, and GOVERNMENT LONG TERM CARE PROGRAMS.

STEP 4-Creating a Personal Care Plan and Choosing a Care Coordinator
(Success is assured through a written plan; accepted by all parties involved.)
The first three steps in the planning process are designed to give you a wealth of information about long term care. It is important for you to have an understanding of care systems and the resources you can turn to when the need arises. However, knowledge of long term care systems is not enough. You must take some tangible action now to prepare for the day when you will need to deal with eldercare for your loved ones or for yourself.

SAN ANTONIO, TX- It's a fact that women, on average, live longer than men and living longer means the cost of retirement will be greater.  However, living longer does not have to mean living poorer or even running out of money: a reverse mortgage may be structured to provide an income for life.
According to a report by the Society of Actuaries, the average life expectancy at age 65 is 17 years for men and 20 years for women.  Of even greater consequence is that women are more likely than men to be widowed, divorced or never married.  For example: between the ages of 75 and 84, 65 percent of women and only 28 percent of men will live alone.

Because women have traditionally been younger than their spouses, women will be widowed 15 years or more.  The death of a spouse can bring an unexpected loss in income support that is not fully offset by a decrease in expenses.  Although Social Security is a guaranteed benefit to widows, it can decrease by as much as one-third upon a husband's death.  Pension benefits may also be reduced, often by half, or payments may stop entirely.  Needless to say, living and health expenses typically do not decrease nearly as much.  Also, a widow will have the added cost of paying for jobs the husband performed such as house repairs and yard work.

A source of financial answers for women who have retired or are planning their retirement is the Women's Institute For A Secure Retirement (WISER).  They provide a number of publications and resources that improve financial security for women.  WISER may be reached at 202-393-5452 or by visiting their website at www.wiserwomen.org.

One of the financial tools that WISER provides information about is the reverse mortgage.  It is growing in popularity especially among retired women.  In the latest statistics from the Department of Housing and Urban Development (HUD), 48 percent of reverse mortgages have been taken out by women, 16 percent by men, and 36 percent by couples.

The reverse mortgage enables homeowners 62 and older to borrow against their home with no repayment for as long as they live in their home.  A reverse mortgage does not affect Social Security or Medicare Benefits, and credit and income are not used in qualifying.  Costs associated with taking out a reverse mortgage are financed so there is usually no money out of pocket.

Reverse mortgages are a non-recourse loan which means that the lender can only look to the sale of the home for repayment when the homeowner dies or moves, and not to other assets or the income or assets from family members.

"With four ways to receive funds from a reverse mortgage, we are able to help our senior customers structure their reverse mortgage to provide income for their lifetime."  Melinda Hipp, Reverse Mortgage Specialist, Legacy Mutual Mortgage, said.  "By setting some of the reverse mortgage funds aside, our customers can ensure that they are able to leave an inheritance to their family."  (Legacy Mutual Mortgage provides you with a free reverse mortgage informational package and confidential estimate by calling them at 210-492-4900 or visiting their website at www.texasreverse.net.)

Although the average age to take out a reverse mortgage is 74, younger women who would like to stop working are discovering that they are able to retire by taking out a reverse mortgage for immediate income, and delay their Social Security Benefits until age 70 so they may receive higher monthly benefits.  It is a good idea to check with the Social Security Administration to discover how different retirement ages will change your benefit.  Contact the SSA by calling 800-772-1213 or go online to www.ssa.gov.

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