How to Protect Your Spouse Even if They’re Under 62
There were many reasons why non-borrowing spouses were removed from title and were not included on the loan when their spouses first obtained a reverse mortgage.
Over the years, there have been many reasons as to why a borrower has removed their spouse from title: whether it be because they were underage at the time the reverse mortgage loan was originated or because they were considerably younger than their spouse, thus making the amount of funds received from the program lower than expected, the non-borrowing has always been a point of concern for many in the industry.
Sometimes, to fully pay off the existing mortgage on the subject property, a borrower had no choice but to leave their spouse off the loan or not be able to pay off their mortgage fully, if at all.
Thankfully, spouses, both over and under the age of 62, are now under the protection of the reverse mortgage loan since August 4, 2014.
**It’s important to remember that the non-borrowing spouse protection rules applies only to loans originated on or after August 4, 2014**
An Innovative Way to Pay Off Your Mortgage (and Plan For Retirement)
When I speak to clients for the first time, they often tell me one of the reasons they never considered a reverse mortgage is because they do not currently have a mortgage.
I let them know, off the bat, that while the reverse mortgage was created as a way to help seniors pay off their mortgage, that facet of the program is only the tip of the iceberg. The reverse mortgage, while not well known for its flexibility, is one of the most flexible mortgage programs around.
If a borrower has a need or simply wants to pay off their mortgage, then they can, and any left-over funds can be stored in a line of credit or can be received via monthly payments for a set amount of years or for life (as long as the borrower lives in their primary residence).
However, the reverse mortgage can also be used as an innovative long-term retirement planning tool. This is the part where many borrowers and their heirs find themselves at a loss because many continue too look into the reverse mortgage (MAINLY) as a loan of last resort when it is, in fact, an innovative way to plan for your retirement and/or pay off your mortgage.
How Much Can a Borrower Receive With a Reverse Mortgage?
That is the question a lot of clients seeking information about the reverse mortgage first ask.
In truth, while how much a borrower can receive is an important question, there are many other things that should be considered before giving numbers to potential clients.
This is the difference between speaking with a flesh and blood broker and punching information on a website calculator and hoping to get an exact amount.
One of the misconceptions consumers have about website calculators is that they will give you accurate numbers. In addition, many think that the reverse mortgage is not for them after looking over numbers in a website calculator.
I can’t stress this enough: a calculator is not an accurate representation of the variety of options available using a Reverse Mortgage Loan. A calculator typically only offers one blank program (that may be a more or less accurate representation of the typical reverse mortgage borrower) but it does not, by any means, mold to every borrower’s specific situation who may be looking into getting a reverse mortgage.
Changes to the Reverse Mortgage Loan Has Positive Effect
Amid the news that the positive press for the reverse mortgage loans have surged in the past months and FINRA’s declaration that the reverse mortgage is no longer a loan of last resort, individual financial planners are beginning to see the advantage of the reverse mortgage loan as a long term retirement planning tool as well as an alternative way of paying off one’s mortgage and using those funds for other uses.
In the past, misuse of reverse mortgages lead to borrower defaults when they were unable to pay their property taxes and insurance. In addition, because most borrowers received their funds in a lump sum, there were instances where little was left over for unexpected expenses.
In an effort to make the program safer for borrowers, changes were made to the program to make it a more advantageous, long-term retirement planning tool and NOT a loan of last resort.
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.
“Reverse Mortgage Loans Fit an Important Niche…”
Says Columbus Dispatch
The reverse mortgage loan has undergone many changes in the past few months, and while some may say it is not worthwhile, despite all the success stories, the reverse mortgage industry will not give up on trying to educate consumers, financial planners, etc. on the benefits of the program.
Most importantly, for those who say the reverse mortgage loan is on its way out, Columbus Dispatch says, “reverse mortgages fit an important niche,” and for that very reason alone they will never cease to exist.
Even in marketing, and branding your company, they say, “find your niche.”
Niches serve a small, but very important part of a certain market. They give you a determined focus and a specific group to appeal to. They exist outside the established norm, in this case, retirement planning strategies, but can be just as worthwhile and advantageous as any mainstream solution.
HELOC Payments are Going from Interest Only to Fully Amortized
This time it’s not about the recovering housing market but about making sure borrowers who took out home equity lines of credit during the boom will be able to make their monthly payments once their loans reach the ten year mark.
Many borrowers have been able to continue making payments on their loans because they have only been making payments on their interest, not their principal balance for the first ten years. At the ten year mark, payments can as much as triple for many borrowers, rendering repayment impossible for some.
Banks have been trying to find a solution so that borrowers continue to make payments on time and prevent delinquencies because the success of consumers can mean their success as well; very much like their failure can spell disaster for banks once again.
The “Misunderstood Mortgage”: Changing the Reputation of HECM Loans
One of the biggest misconceptions about the reverse mortgage loan is that the program should just be used as a last resort. From financial planners to borrowers, many looked into the reverse mortgage loans for themselves or their clients if they were in a financial crisis.
This could not be further from the truth.
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.