I found this information and thought it would be extremely helpful to share with anyone considering a reverse mortgage, or anyone helping an aging loved one with this decision. At the end of this post I have a link to a FREE video that explains the basics of Reverse Mortgages. Check it out!
AARP answers your questions:
The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage insured by the federal government. HECM loans are insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD). The FHA tells HECM lenders how much they can lend you, based on your age and your home’s value. The HECM program limits your loan costs, and the FHA guarantees that lenders will meet their obligations. HECMs Versus Other Reverses HECM loans generally provide the largest loan advances of any reverse mortgage. HECMs also give you the most choices in how the loan is paid to you, and you can use the money for any purpose. Although they can be costly, HECMs are generally less expensive than privately-insured reverse mortgages. Other reverse mortgages may have smaller fees, but they generally have higher interest rates. On the whole, HECMs are likely to cost less in most cases. A notable exception may be the reverse mortgages now being developed by some credit unions.
The only reverse mortgages that always cost the least are ones offered by state or local governments. These loans typically must be used for one specific purpose only, for example, to repair your home, or pay your property taxes. They also generally are available only to homeowners with low to moderate incomes. Who is Eligible
HECM loans are available in all 50 states, the District of Columbia, and Puerto Rico. To be eligible for a HECM loan:
• you, and any other current owners of your home, must be aged 62 or over, and live in your home as a principal residence; • your home must be a single-family residence in a 1- to 4-unit dwelling, a condominium, or part of a planned unit development (PUD). Some manufactured homes are eligible, but most mobile homes are not; cooperatives are expected to become eligible by the end of 2008. • your home must meet HUD’s minimum property standards, but you can use the HECM to pay for repairs that may be required; and • you must discuss the program with a counselor from a HUD-approved counseling agency. Repaying a HECM
As with most reverse mortgages, you must repay a HECM loan in full when the last surviving borrower dies or sells the home. It also may become due if: • you allow the property to deteriorate, except for reasonable wear and tear, and you fail to correct the problem; or • all borrowers permanently move to a new principal residence; or • the last surviving borrower fails to live in the home for 12 months in a row because of physical or mental illness; or • you fail to pay property taxes or hazard insurance, or violate any other borrower obligation. Debt Limit
If your rising HECM loan balance ever grows to equal the value of your home, then your total debt is limited by the value of your home if the home is sold to repay the loan. But if the home is not sold and the loan is repaid with other funds, then you or your estate would owe the full loan balance–even if it is greater than your home’s value. Your heirs would not have any personal liability for repaying the loan.
Click HERE to gain access to the FREE Video on Reverse Mortgages- be sure to watch!
Larry Morris CMPS American Nationwide Mortgage Company, Inc. 307 E 2nd St. #230 Newberg, OR 97132 OR License ML-3259 WA License WA-510-LO-51175
Toll Free - 1-888-660-2842 Cell - 503-421-0096 Fax - 1-888-649-6625
www.PDX-Mortgage.com www.OregonReverseMortgageNews.com
In a recent article on caregiver burnout (shown below), many seniors are finding it hard to keep up with the stress associated with care for their loved ones. In some cases, a Reverse Mortgage can provide the funds to allow a loved one to stay in their home and either hire professional help to come in and provide care, provide funds for Adult Day Care, or provide the funds to allow the loved one to go into a professional treatment facility while the other remains in their home.
All too often it is felt that the only option is to sell the home to provide for the funds for treatment, or that assets need to be liquidated in order to qualify for a medicaid facility. If there is adequate equity in the home, a properly structured Reverse Mortgage can provide the funds to solve this dilema.
Contact me if you would like to discuss this. 503-421-0096
Caregiver Burnout - Adult Day Care Services to the Rescue
If you are a primary caregiver for a loved one, you are well aware of the daily stress and emotional and physical impact it can have on your health.
Susan learned this first hand when she and her husband, Tom, brought his Mom home to live with them. Mom suffered from dementia and had to be watched constantly. Susan found that when you become a caregiver, you start by giving up a few things you usually do for yourself to make up for the time needed for caregiving. Even though your service is one of love and you are willing to do the sacrifice on behalf of your loved one, you find yourself giving up a lot more as time goes on.
“As a caregiver,” Susan laments, “You are often frustrated that you can’t do enough for your loved one and so guilt and feelings of inadequacy set in. Couple that with feelings of being unduly burdened, of resentment, of stress and then of more guilt at having those feelings.”
She continues, “Now don’t get me wrong, I am very glad that I spent those years in caregiving. There were many cherished moments with Mom that only I experienced.”
In order to enjoy those moments and sustain your caregiving momentum, a little respite is essential.
An article posted on About.com by Carrie Hill, PhD states:
“Caregivers who use respite care often tell me that although caregiving is one of the hardest jobs they’ve ever had, they wouldn’t trade the experience for anything. Helping a family member or close friend who has Alzheimer’s disease can provide a sense of purpose and great satisfaction. Still, the emotional and physical demands of caregiving make it hard to be a caregiver 24 hours a day, 7 days a week. Without respite care — a temporary break from the demands of caregiving — you may be more susceptible to the effects of caregiver stress, such as depression, exhaustion and other health problems.
Carrie Hill, PhD, About.com “Why Caregivers Need Respite CareGiving Yourself a Break Helps You and Your Loved One” Updated: August 3, 2008
Be on the lookout for caregiver burnout. It can creep up on you without your noticing it. Caregiver burnout symptoms can include:
•depression •anxiety, irritability, or anger •feelings of exhaustion •self-criticism •Withdrawal from usual activities •trouble with handling caregiving responsibilities •substance abuse
The need for support for caregivers at home has received national recognition. State Human Resource Departments and Area Agency on Aging Services are offering more counseling and respite services for caregivers. The ARCH National Respite Services is also an organization that is reaching out to educate and support caregivers in many states. There is, however, one service that is highly valuable but very underused:
Adult Day Care to the Rescue!
Adult Day Care respite is two-fold. It gives the caregivers much needed time to themselves and gives their loved ones social and interactive therapy with their peers.
Many adult day services offer such things as:
•Social activities; music, movies, crafts, excursions •Meals •Fellowship support •Assistance with daily living •Nursing care •Help with activities of daily living •Medications •Physical therapy •Transportation
Finding an Adult Day Services provider takes a little investigating on your part. It is important to know what you are getting and that your loved one is comfortable with his or her new surroundings.
First: Ask for recommendations.
Check with your local Senior Center, Area Agency on Aging Services, Mental Health Centers, Doctor, Clinic, Family, Friends and neighbors. The best recommendation is by someone who has used the adult day services or is familiar with those who run it.
Second: Call and ask the facility to send you information.
Ask specifically to be sent the application, eligibility requirements and payment information.
Ask to see the calendar of activities, menus, hours and days of operation are needed to be sure to fit your schedule.
Ask about availability of transportation to and from the location and what is the cost.
Ask who runs the facility. Is it private, non-profit or a franchise or part of an assisted living facility or a nursing home?
Third: Visit the Adult Day Care facility.
Go visit the provider location along with the person you are caring for.
See if the staff is friendly.
Check that it is clean and odor free.
Ask about the experience of the staff.
Request a list of references.
Fourth: Find out the cost and payment requirements.
A survey from NCOA/NADSA provides the following information on fees:
“Fees for Adult Day Care providers range from $25 per day to $70 per day, with the average around $50 per day. Many facilities provide services with a sliding fee scale.”
One last word of advice. Don’t feel guilty about taking your loved one to adult day care.
Susan’s mother-in-law complained bitterly about leaving home and going to the adult day care facility, expounding on how Susan just didn’t want her around anymore. This only increased the guilt Susan was already feeling, but Susan was also determined that she needed the respite time the day care would provide and they pressed forward. That evening as Susan picked up Mom and helped her into the car, Mom — who suffered from dementia — exclaimed, “That was the nicest resort I have ever been to!”
To learn more about the AOA National Caregiver Support Program go to:
http://www.aoa.gov/prof/aoaprog/caregiver/caregiver.aspx
The National Care Planning Council supports Caregivers and Adult Day Care Providers
http://www.longtermcarelink.net/a7adultdaycareservices.htm
For more information on how a Reverse Mortgage can help you and your loved ones, please contact me at 503-421-0096, larry@PDX-Mortgage.com or go to my website at Oregon Reverse Mortgage
Jack and Betty own a duplex that is completely paid off. At 79, Jack is still driving truck but is seeing a downturn in his income due to the economy. Last year they made over $90,000 between driving, a couple of pensions and SSR. They haven’t rented out the 2nd unit in the duplex for a few years as there isn’t enough room in the driveway for more then 2 cars. Parking on the street disappeared several years ago when the city widened their street.
Jack’s concern was to be able to pave over the yard and create more parking, and for Betty to have access to cash should she need it if Jack were away from town on a trip. Betty was concerned about the ability to pay their bills with Jacks reduction in work. They both wanted to access cash as they need it rather then tap all of the equity at one time. They also would like to be able to leave some money to a Niece and her husband.
We looked at taking out a traditional Equity Line of Credit. While it would have been the least expensive option up front, it would have required them to make a monthly payment. At that point, the rent from the other side of the duplex would have covered the new mortgage debt with a few hundred dollars left over.
After talking with Jack and Betty, my solution was to use a HECM 175 Reverse Mortgage with a cash draw in an amount sufficient to make the needed repairs to their property and give nice cushion for the remainder of the year. This also left them with a sizable line of credit that will continue to grow as their property appreciates.
This loan is setup so that if they use their equity wisely, and if the home appreciates at 5% per year, their equity will never be exhausted. In fact, if they live to age 100, there will still be roughly $357,000 in equity after paying off the loan balance.
While Jack and Betty didn’t “need” a Reverse Mortgage, they have found that it has allowed them to do some things that need to be done without selling their home or making drastic cuts to their living. It also is giving them the peace of mind in knowing that they have unlocked the equity in their home should they need it.
While this isn’t sophisticated mortgage planning, it is solving a real life problem for real clients.
Call me if you would like to see if a Reverse Mortgage is right for you.
Whether or not we are in a recession or just feeling the effects of inflation, the bottom line is things are more expensive then they used to be. And I’m not talking about nickle candy bars costing a dollar.
Gas is now over $4 per gallon and expected to keep going higher. This has affected almost everything we buy since it takes trucks to get most of our goods to market. One solutions seems to be to switch to ethanol. Many farmers have jumped onboard and are growing corn to sell for fuel. This has added to the rise in cost of food as less land is available for growing crops.
The end result is that most people are feeling squeezed by the economy and having problems making ends meet. Senior citizens are not immune to this either.
In a recent poll, AARP reports, in it’s June 08 Bulletin, that 69% of seniors age 50-64 indicated that they are finding it more difficult to pay for essential items like food, gas and medicine. 59% of seniors age 65 and older reported the same. The scary fact is that 26% of seniors age 50-64 and 19% age 65 and older have prematurely withdrawn funds from the retirement accounts. This is alarming!!
For those seniors who haven’t retired yet, this will drastically affect their ability to enjoy their retirement, or force them to work longer. For those already in retirement, pulling from the principle of their retirement accounts throws off track their retirement income. For many, the goal is to live off the interest and leave the principle alone.
Financial planners I speak with tell me that most of their clients have done a good job planning for retirement, but they couldn’t anticipate $4 per gallon gas and the trickle down impact of that. They are fearful for their clients future. For many, a Reverse Mortgage can provide a solution to this problem.
One of the benefits of the recent Real Estate boom was an unexpected increase in property values. For those who have owned their homes for more then 5 years, and didn’t pull the equity out, there has been an incredible increase in equity. This also wasn’t part of their retirement plans. The usual “expected” property value increase is 4-6%. Over the last few years we saw values increase in some markets by 25% or more per year for several years in a row.
I believe that many seniors can benefit from tapping into this unexpected gain to counter the impact of the current economic woes.
In Oregon, we are still seeing modest increases in most markets. More then anything, we are getting back to normal. Many of us however are sitting on a small fortune. The question is whether or not it can easily be accessed. Following are several ways:
Family Gifts or Loans - While this is probably the preferred method, many seniors will not ask their kids for money. Also, most of us are in the same situation. In order to help others we have to give up something ourselves. For many, helping their parents means delaying retirement themselves.
Home Equity Line of Credit- This is an inexpensive way to unlock the equity, but as you use it, you have to pay it back. The more you use, the larger your monthly payment will be. If you stop making a payment you risk going into foreclosure. If you know for sure that you will be selling you place within a year or two, this is still one of the best options.
Sell and move to a smaller home or condo - This can be a good solution if you truly want, or need to move, but it also comes with expensive closing costs on 2 properties and and you will leave many memories behind. This may also be your only solution if you don’t have a lot of equity in your property.
Reverse Mortgage - For many, this will be the best solution. A properly structured Reverse Mortgage will improve the quality of life for those who find themselves short of cash or concerned about the future.
These are just a few exanples of how a Reverse Mortgage can help you or your loved ones through these trying times.
My advise? Call me. Let’s discuss your options and see if a Reverse Mortgage is the best option.
Larry Morris, CMPS 503-476-3854
If you are an Oregon Senior Citizen and are having problems making your county property tax payment, the State of Oregon Property Tax Deferral Program may be the solution for you. If you qualify, you can defer your taxes until a later date. To qualify:
If you are married and apply jointly with your spouse, you both must be 62 years old on or before April 15. If only one spouse is 62, you must file your application as an individual.
Joint owners—Two or more people may apply for deferral as joint applicants. Both must be 62 years or older.
The taxes are deferred until you sell, move out or die…very similar to the events that would cause a Reverse Mortgage to become due. The deferred taxes accumulate at a rate of 6% interest per year, which is often higher then the Reverse Mortgage interest rate.
The Tax Deferral program can be used in conjunction with a Reverse Mortgage to free up even more cash on a monthly basis, or they can be used separately.
If you are behind on your county property taxes, a Reverse Mortgage can be used to bring you current. We will then help you get enrolled in the State Tax Deferral program if you qualify. If you don’t qualify for the Tax Deferral Program, a Reverse Mortgage might be able to help you make your payment.
If you would like more information on this program, feel free to give me a call.
Larry Morris
