New Financial Assessment Date Gives Industry Time to Breathe
When the first effective date for the financial assessment was first announced to be March 2015, there was a collective groan in the industry.
It was finally here, that which would determine the eligibility of a borrower based on income and credit, the one thing that set the reverse mortgage apart from all other loans, and the potential implications (good and bad) of this action have yet to determined.
This is why when HUD announced that there would be an extension to the financial assessment of possibly 30 to 60 days, the industry realized it had time to breath, gauge the situation and make sure everyone, from brokers to their computer systems, were correctly set up, trained and ready to go.
Officially, HUD has finally set the new effective date for the financial assessment: April 27, 2015.
An Alternative to Nursing Homes With the Reverse Mortgage
When I recommend and go over the in’s and out’s of reverse mortgages with clients, one of the fears they have is that that the reverse mortgage will become due and payable if their health fails and they need to move into a nursing home.
However, a reverse mortgage is one of the retirement planning strategies that can be used to secure long-term, in home care without having to move from the comfort of your home.
According to data collected by Genworth Financial, Inc., a private room in a nursing home in Florida is more than double the cost of receiving long-term, in-home care. On average, homemaker services and home health aide cost around $40,000 per year while a private room costs, on average, $90,000.
Reverse Mortgages Loans Can Help Seniors Retire Comfortably
The most difficult part of educating seniors and their caregivers about the reverse mortgage is the fact that they have heard and/or read so many negative news that they cannot fathom any positive news about the reverse mortgage loans.
In a sense, it seems impossible to them that any positive can ever come out of the reverse mortgage. Thankfully, the tide of change is coming swiftly for the NEW reverse mortgage program, where, not only is the reverse mortgage industry poised to benefit from, but seniors, their caregivers, their heirs, their financial planners, etc. as well.
For example, let’s say a couple did everything right in order to make it a comfortable retirement, however, their mortgage payment is higher than they ever imagined and burning a hole in their pocket every month.
A reverse mortgage is a potential avenue for seniors whose monthly mortgage payment has been unmanageable and would rather put their monthly income to better use than their mortgage payments, especially if they have already retired (probably later than expected).
Positive Press Surges for Reverse Mortgages During June
The recent changes to the reverse mortgage cam swiftly last September 30 and changed the landscape of the reverse mortgage program for future borrowers.
One of the biggest hurdles since the changes, however, has been combating the established reputation of the reverse mortgage program as a “loan of last resort,” that should only be used if (and only if) you have no other options.
Slowly, but surely, the reputation of the reverse mortgage is on the up and up and, NRMLA reports, the press results for the month of June 2014 are the most positive since August of 2013.
Nationally, states the article, there were 195 positive stories last month and just 14 negative, a 13:1 ratio or 93% of a favorable result.
NRMLA Reissues Ethics Guidance for HECM-to-HECM Refinance After Recent Changes
The reverse mortgage program continues to change for the better, this time making more proceeds for older borrowers.
According to an article published by Reverse Mortgage Daily, at an interest rate of 6% borrowers who are 78 and older will potentially have access to greater principal limits than before.
This change means more money for older borrowers and a greater chance of a HECM-to-HECM Refinance for borrowers who obtained a reverse mortgage before the changes were announced.
While borrower(s) must wait at least 6 months from the closing date of their reverse mortgage in order to be eligible for a refinance, NRMLA once again stresses the importance of maintaining ethical values while speaking with potential clients about the possibility of a HECM-to-HECM Refinance.
HECM For Purchase: Downsizing With a Reverse Mortgage
Back in 2008, Congress authorized a HECM for Purchase loan, allowing seniors, for the first time, the ability to buy a house and take out a reverse mortgage at the same time. This option still continues to be the best option for older Americans looking to downsize after they retire without breaking the bank.
Under this new program, homeowners only incur one set of closing costs, making buying a home (and getting a reverse mortgage) all the more cost-effective. As a matter of fact, the fees, terms, conditions and interest rates are identical to those in a traditional reverse mortgage.
One benefit of the HECM For Purchase Loan is the lack of monthly mortgage payments even though a homeowner has just bought a new home.
What’s the Largest Asset in Your Retirement Portfolio?
According to an article published in Reverse Mortgage Daily, housing assets continue to be the largest dominant force in many senior retirement portfolios, revealed a report from the Mortgage Bankers Association’s Research Institute for Housing America.
This isn’t particularly shocking news, even after 2010 when housing prices bottomed out. Houses are still the greatest asset in a senior’s retirement portfolio because they remain the biggest investment many Americans will make during their lifetimes. It’s worth more than stocks, social security and a car all-together.
In addition, a study has revealed that older Americans who own homes are more financially secure and generally experience fewer impediments to good health than their peers who rent. The best reason for this is that seniors who own their homes are able to modify their properties according to their health needs, if these needs ever should arise.
Consider Every Retirement Planning Option…Including a Reverse Mortgage Loan
A reverse mortgage loan, or home equity conversion mortgage, is a helpful alternative to many seniors, who may need the funds immediately, or are hoping to leverage the home equity they have acquired during their working years to favorably save up for retirement.
The fact of the matter is, the reverse mortgage loan continues to be thought of as a last resort, something to get only if the situation is dire enough. This is, not only a disservice to the program, but a disservice to future clients who may be looking into it as an alternative retirement planning option.
In fact, people may think of the reserve mortgage as a last resort, but no one ever thinks of buying a second home as a last resort or investing stocks as a last resort, they respect it as viable retirement options.
However, are these options sure fire ways to have enough funds to supplement a suitable retirement?
Reverse Mortgage Loans Are Kinder and Gentler After Changes
In the past few months, since the changes to the reverse mortgage brought the product back to basics, many financial planners are finally seeing the advantages, not only to the changes, but also to the program itself.
The reverse mortgage was never created to be a “loan of last resort,” even though many borrowers used it as such. In fact, it was created as a way for borrowers to age in place comfortably and use the equity they have built up throughout the years. In all honesty, the reverse mortgage loan was meant to be an investment like any other, one that would secure considerable funds for the future.
PS Financial Services is the #4 Reverse Mortgage Broker in Florida
If it’s true that hard work does pay off then PS Financial Services is reaping the rewards of months of hard work.
When I first founded PS Financial Services in August 2012, I did it because I wanted to help clients 62 years of age live more comfortably during their retirement in a fast, efficient and low cost manner.
A year and a half later, PS Financial Services is the #4 Reverse Mortgage Broker in Florida, according to Reverse Mortgage Insight report for the last quarter of 2013.
This gives me confidence that, not only does the reverse mortgage continue to be a worthwhile option for many seniors, but also that the current set up of my company, as Reverse Mortgage brokers, is the best for all our clients.